Miami Bankruptcy Attorney Blog

One of the biggest mistakes a debtor can do, before filing for bankruptcy, is to repay debts owed to the debtors’ relatives or friends.

When a debtor files for bankruptcy a trustee is appointed in the case.  The trustee’s job is similar to that of a referee, whereby the trustee reviews the debtor’s bankruptcy schedules and makes sure everything looks normal.  The trustee also reviews the debtor’s tax returns, bank statements, and any other financial documents.  The trustee will review your financial documents to see if you have made any illegal transfers.

Under the bankruptcy code, any transfer repaid to a relative or other “insider” within twelve (12) months prior to filing a bankruptcy case can be recovered by the Trustee in that case.    That means that the Trustee can (and, depending on the amounts involved, will) sue that relative to recover the money or property repaid to them during that period.    This is known as a “preferential transfer” and the bankruptcy statute is 11 U.S.C. 547.  Furthermore the bankruptcy trustee can piggyback onto Florida state law and extend the fraudulent transfer period for an insider for upwards of four years.

Payments made to non-insiders (non-relatives) follow the same law, except the look back period for those transfers is only 90 days prior to the bankruptcy filing.

If you are thinking of filing for bankruptcy in South Florida, and would like to schedule a free consultation with a local bankruptcy attorney then please contact Ofer Shmucher at Shmucher Law, PL by calling 305.741.5553 or Read more…

So you have decided that you want to file for bankruptcy and you have met with a lawyer or two and they have quoted a flat fee price for your bankruptcy case.  The next question that generally comes to your mind is how am I going to pay the attorney fee?   Your first thought is to use your credit card to pay for your attorney fee.  No bankruptcy attorney will ever accept your credit card to file your bankruptcy because you are going to be discharging the debt on your credit card after you file your case.

Most bankruptcy lawyers will only accept a cash or a check, and sometimes will have a machine available to run a debt card.  Few attorneys will have a credit card machine to run a credit card from a family member or a friend of yours (not likely).

If you are thinking of filing for bankruptcy in Florida and would like to schedule a free consultation with a bankruptcy lawyer then please contact Shmucher Law, PL at 954.309.5559 or 305.741.5553.  We offer free bankruptcy consultations in any of our offices throughout South Florida including Boca Raton, Fort Lauderdale, Miami, Plantation, and Sunrise Florida.

People tend to borrow money friend friends and family prior to filing for bankruptcy, usually in an effort to avoid filing for bankruptcy.  However, when the person finally decides to file bankruptcy they want to make good, and payback that relative for the monies borrowed.  Is this a good idea?  Absolutely not.

With limited exceptions, DO NOT payback personal loans prior to filing for bankruptcy.  Why?  The paying back of a personal loan triggers two different potential actions in your bankruptcy case, a preference and a fraudulent transfer.

A preference is a payment to a preferred creditor in a certain period prior to filing bankruptcy.  For Creditors that are deemed to be insiders (relative or business partner) the look back period is one year.

For creditors that are non-insiders the look back is 90 days.

Here is a brief explanation of a preference.  You owe mom and dad $3,000, Visa $20,000, and Amex $30,000.  Prior to the filing of your bankruptcy you choose to pay mom and dad back entirely and don’t pay anything to Visa or Amex.  Here you are “PREFERRING” to pay your parents rather than your other unsecured creditors.

If the trustee, in your bankruptcy, sees that there is a preferential payment he or she will likely bring an action, to recover the money, against the party who received it.  In the example above, more likely than not mom and dad would receive a letter and or a lawsuit informing them that they need to return the monies they received from you.

The more serious issue can arise when you pay money to a relative, friend, or immediate family member.  This is called a fraudulent transfer.  A fraudulent transfer is a transfer that you make, prior to filing for bankruptcy, in which you tend to shield your money away from creditors.   If a debtor is found to have made a fraudulent transfer their bankruptcy discharge can be denied.

Please feel free to contact bankruptcy lawyer Ofer Shmucher to review your situation.  Shmucher Law, PL offers free consultations in any of our South Florida office locations including Boca Raton, Fort Lauderdale, Miami, Plantation, and Sunrise Florida.