January 25th, 2013 by Questions

If I sell my house for a small profit and withdraw that profit immediately to pay personal debts to family and friends and then attempt a consumer proposal or declare bankruptcy against my credit card creditors, is this illegal? Basically, I’m trying tp pay the people closest to me before my larger unsecured creditors. Since there isn’t suffficient funds to pay everyone fully. My creditors will be forced to accept 25 cents on the dollar or I would have to declare bankruptcy.

Posted from: Quebec


One Response to “help”

, A licensed trustee said:

What you are talking about doing is called a preferrential payment and yes, it will get you into trouble. One of the basic concepts of bankrptcy law (which includes proposals) is that all of your creditors get treated equally. If you pay some of your creditors off in full and then ask the rest to accept less than the full amount you have “preferred” the people you paid in full. The Court has a right to demand repayment by the people that recieved the money or to make you pay an equal amount to all of your other creditors in addition to whatever you’ve already offerred in you proposal.

By the way, you may offer your creditors 25 cents on the dollar, but you can’t force them to accept it. As crazy as this may sound to you and me, there are times (like when someone pays off family and friends first) that the creditors don’t care how much you offer to pay them – they simply say no.

Go and speak to a local trustee about your options BEFORE you do what you are thinking about doing.

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