Mankato, MN Bankruptcy Attorneys at Behm Law Group, Ltd.
If you made a credit card payment of more than $600, and within 90 days—the preference period—of that payment you filed for bankruptcy, your bankruptcy trustee can request to reclaim that payment.
Don’t get too excited, however, because you won’t be getting that money back. Rather, your bankruptcy trustee will take that reclaimed payment and divide it evenly among the original creditor and all other similarly situated creditors.
This section of the Bankruptcy Code (11 U.S.C § 547) deals with the fair and equal treatment of all unsecured creditors, although the original creditor from which the payment was reclaimed may not agree it’s all that fair.
This preferential payments to creditors clause understandably causes some consternation among creditors who must return payments and in turn receive a smaller amount, but it’s intended to ensure all creditors involved receive at least some amount of compensation back from the debtor.
Under the Bankruptcy Code, a debtor is assumed to have been insolvent during the 90 days prior to the debtor filing for bankruptcy. All debtor-to-creditor transfers and payments—over $600—made during that 90 day period are therefore considered suspect.
To learn more about this Bankruptcy Code clause, or for more information about bankruptcy law in general and your bankruptcy options in particular, contact Behm Law Group, Ltd. We have a professional and knowledgeable bankruptcy attorney team who serves Mankato, MN and the surrounding communities. Learn about your bankruptcy options and rights today.