I have a question. I am doing everything I can to not choose door number 3, the bankruptcy option. Some of my creditors and CA's are working with me, while others are less than willing. Is it illegal to pay some creditors/CA's and not others? I know I can pay on any of my secured debt, but paying some unsecured and not others? I also know about preferences in a bankruptcy, and I'm not concerned that any of my creditors/CA's will receive more than $600.00 in any 90 day period. I'm just curious. Does paying one creditor over another constitute a "fraudulent transfer?" This board has been quite helpful these past few weeks.
You can legally pay whomever you want and not pay whomever you want, except within 3 months ofa BK filing (where the possibility of a Preferential Treatment Claim could arise).
As Flying mentioned, be particularly careful of whom you pay and in what amount prior to entering a petition.
Thanks. BK is my last option. I intend to pay on my secured (two autos, a computer, etc). I'm in deep $70K unsecured and an additional $75K student loans (ran out of forebearances, defers, etc). I make good money, but am starting to get behind. Citi, BOFA/MBNA, and a default judgment (not reporting), and others are working with me. Credit unions seem to be a tough nut to crack. One is willing to hear a proposal on a $5K CC, and the other is less inclined. I've been nothing but honest with them about my declining overtime and the fact that I have no assets and am upside-down on the two cars (nothing to gain by forcing me to sell the cars). I suggested to a few that they may just have to file suit and go for the 25% of net garnishment in my state, and then deal with the writs that must be renewed every 90 days. I read the post by Flying and chimed in. Surprisingly, the I don't give a sh*t attitude seemed to allow for opening negotiations. All I can do is wait and see. Wage garnishment is all anyone can get from me. I'm trying to keep up with local creditors who can run down to the county courthouse, and the others I'm trying to negotiate with. If I can make it to next November, I'll have a "potetnially" substantial raise in salary and can begin to sort out the mess I'm creating. Any advice from this board is greatly appreciated.
If you are above the median income for a BK 7, dealing with wage garnishment is probably the least painful route to take. A lack of assets will not deter creditors. If you are gainfully employed with a good income, they will attempt to get their share.
eelb: I'm chuckling as I read yoru first sentence. I'm well above the median income and I do not have enough recognized expenses to get me into a 7. I have studied every form and read a multitude of posts on other forums related to the new and improved BK 13. I do belive in my case you are correct in stating wage garnishment might be the least painful. It doesn't seem like this should make sense, but it is the only way to currently have some control. With the exception of potential trauma dealing with CA's down the road, I think I prefer having control of 75% of my take home, than 0% in a BK 13. The law doesn't leave much. I apprecaite your comment about garnishment being the least painful (hard to believe). I know the creditors will come out in force, but if I can work with some of them, it might keep the real nasty ones down in number. I've even listed all my creditors and what I owe in a spreadsheet and put check marks by who is/might work with me, and who will bail out and send me off to collections. I've even looked at my take-home adjusted for a 25% garnishment and have a sub-plan for working with the remaining. If someone does act to get a judgment and garnishment, they will automatically go to the bottom of my preferences list. I wonder if others have gone through such a process attempting to work through a financial crisis.
