What to do if I just filed Chapter 7 and then sold my business but now the trustee wants the money that I used to pay people back?
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What to do if I just filed Chapter 7 and then sold my business but now the trustee wants the money that I used to pay people back?
Can she do that? The business was losing money and I only made enough on the sale to pay all the bills including 2 people that had loaned me money. Now the trustee wants them to mail the money back but they don’t have it anymore. Do they have too?
Asked on June 14, 2012 under Bankruptcy Law, Colorado
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 11 years ago | Contributor
Good question. The money that you received from the sale of your business that you paid out to creditors within 90 days of your bankruptcy filing can be deemed by the trustee a preferential payment to defraud creditors and an asset to be returned to the bankruptcy estate under federal law.
In the situation that you are writing about, the people who you paid most likely will have to return the money that you paid them to the trustee and if not, they could be cited by the court and penalized.
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