I am a landlord a tenant filed bankruptcy and was behind in rent and utilities. The tenant paid me the rent and utilities in full to avoid eviction. Now her lawyer is requesting me to send the money back since it was paid within 90days of filing chapter7 bankruptcy. The properties are in Indiana.
Congress decided long ago that a bankruptcy debtor cannot be allowed to favor one creditor over the others on the eve of bankruptcy, so the rule in the Bankruptcy Code that applies to your is this: payments made to a creditor amounting to $600 or more within 90 days of filing on a past-due account (not current rent) are recoverable as a "preference." Typically it is the bankruptcy trustee that does the preference recovery but the debtor can do so when the funds are exempt. Because you are a creditor and your actions to collect the debt are restrained by the automatic stay order and subject to sanctions that could sting, you should promptly seek the advice of an experienced local bankruptcy attorney, especially as to your right to evict.
Best wishes for a favorable outcome, and please remember to designate a best answer.
This answer is offered as a public service for general information only and may not be relied upon as legal advice.
There is a general principle in bankruptcy that a debtor may not favor one creditor over another within a certain time period prior to filing bankruptcy (see 11 U.S.C. 547 - Preferences). You MIGHT have received a preferential payment from the debtor that MIGHT have to be returned if you received more than $600 in the 90 days prior to the filing of the bankruptcy case.
In the vast majority of cases, the only person in the bankruptcy system that should be seeking the return of the potentially preferential payment is the trustee assigned to the debtor's case. The debtor's attorney almost certainly has no grounds for asking you to repay the money.
As a prior answer indicated, there are occasions in which the debtor may elect to "exempt" certain preferential payments an attempt to recover them. 11 USC 522(g) and (h) address this situation. These sections only allow a debtor to exempt the funds if the transfer was involuntary (i.e. a garnishment) rather than a voluntary payment, as your question implies. Thus, the debtor's attorney cannot seek repayment since 11 USC 547 powers only apply to bankruptcy trustees and since 11 USC 522(g) and (h) don't apply since the payment was voluntary.
You may, however, be subject to being pursued by the bankruptcy trustee for recovery of the payment. You should, however, not immediately acquiescence to a trustee's demand. In that case, go seek the advise of a bankruptcy attorney who can discuss potential defenses that you may have to preferential transfer claims.
Please remember to choose the best answer. The discussion above is general in nature and is not a substitute for seeking advise from proper legal counsel. No attorney-client relationship or privilege is established by this discussion.
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