Information on paying creditors
I have a ton of debt and I am going to attempt to pay all of it. None of my creditors are relatives…so my question…if I pay $5,000 to a creditor today (to CRA or a credit card) and have to file for bankruptcy in 14 months does that $5,000 get reversed or will it be considered that I have preferred creditors?
I have been paying about $3,000 a month towards my debt and I plan on continuing this trend but want to make sure I am doing it right. I am going to continue this for at least another year and then see where I am at…but I believe I can pay everything…but if you would send me an email with the answer to my question that would be great.
Under the Bankruptcy and Insolvency Act, the Trustee can, under certain circumstances, set aside fraudulent preferences up to three months prior to the date of bankruptcy in the case of arm’s length parties and one year in the case of non-arm’s length parties. The Provinces also have Acts that can set aside these transactions.
So long as you are paying down the debt in a fair and regular manner no one should question the payments.
– Licensed Insolvency Trustee (LIT)