Preferential Debt Repayment

August 15th, 2008 by Questions

I am quite far in debt with a number of unsecured lenders. I am potentially receiving a lump-sum of money in the next month or so, though no where near the total debt.

I am considering a proposal as a means to get back on my feet.

What am I to do with this lump-sum IF I receive it? Should I use it to reduce debt or should I keep it on hand to help fund the proposal?

Also, if I were to pay down one particular lender (student loans) who would not be bound to the terms of the proposal (less than 10 years), how many months would I have to wait before filing the proposal to eliminate the risk of having this lump-sum debt payment seen as preferential creditor treatment?

Posted from: Alberta


One Response to “Preferential Debt Repayment”

, Barton Goth - Goth & Company Inc. - Bankruptcy Trustees said:

The best thing to do would be to retain the money and instead of pay creditors directly, make it a lump sum payment at the beginning of the proposal. This way you will eliminate the risk of doing anything questionable. In terms of the prefrential issues, I am not in a position where I can advise you how to defeat the rights of creditors, but I can say that the period can be up to 5 years in some cases, so you are much better off not to be involved in anything like that.
At this point I would suggest that you contact a local trustee, even before the receipt of the money so you can develop a plan of action to take care of the debts in question.

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