Legal Question in Bankruptcy in Oregon

Paying a large personal loan before filing bankruptcy

Hi, I would greatly appreciate a prompt response. Approximately 18 months ago, I borrowed $13,000 from my girl friend at the time. She is now my wife. I have paid off $3,000 of this loan. Our agreement is for the loan to be paid off in full upon my selling of my home from a pervious marriage. I have thus sold the home and received my portion of the profits. Unfortunately, I, my ex-wife and her parents are in the middle of a lawsuit. If I lose this case, I will be forced to file bankruptcy. I do still need to pay $10,000 to my wife. I can do this by borrowing against my 401k. My wife is in the process of purchasing a home in her name only, due to this lawsuit. She needs this money as part of her down payment. If I file bankruptcy, it will be in approximately 3 months. Will this raise a red flag if I repay my wife and would I be denied my bankruptcy? I hope I have made myself clear. Thank You so much!!


Asked on 6/10/05, 7:48 pm

1 Answer from Attorneys
Noel Snyder Law Office of Noel Snyder

Re: Paying a large personal loan before filing bankruptcy

If you repay your wife $10,000 three months before filing bankruptcy I would expect the bankruptcy trustee to sue your wife to turn over the $10,000 as a preferential transfer. It would be a huge mistake to borrow against your 401K (an asset that is exempt from inclusion in the bankruptcy process). The better move is to have your wife take out a short term loan for the downpayment then pay her or the short term loan off after the bankruptcy

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Answered on 6/11/05, 9:11 am


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