Q: I filed chapter 13 December 3,2020. A creditor/credit union debited my account 7 days prior.How do I recover those fund
I thought it was a certain number of time that debt would have to be returned to the person once they filed bankruptcy. I reside in Virginia.
Generally, a debtor or bankruptcy trustee can recover payments over $600 to any unsecured creditor within ninety days preceding a bankruptcy filing, as a "preferential transfer".
But that's not true about secured claims (debts secured by collateral).
Credit unions enjoy a special statutory lien on all of their debtor's deposits, whether in a checking, savings deposit or a CD, so long as the CU has in some way informed their member debtors of that lien right, beforehand. And that lien makes debts owed to the CU secured claims in the vent of bankruptcy (to the extent of the amount of funds on deposit).
Certainly, you could request that the CU return the amounts debited, but I doubt that you can get a court to order the CU to disgorge the debited amount if that amount was used to pay down its secured claim.
A: They are allowed to debit the funds before you file bankruptcy. It's when they continue collection activity AFTER you file, that they should return the money to you. What you might be thinking about are preferences (Bankr. Code Section 547). This is where the Trustee recovers certain transfers that were made within the 90 days before filing, but the Trustee would only do this to distribute to creditors. Preferences are considered property of the bankruptcy estate and are not exempt.
A: It depends why the money was debited and also whether the trustee takes an interest in the funds. If the money was for a secured loan on a piece of collateral you own then the money is not recoverable. If it was not for secured collateral and the payments were over $600, the trustee has first right to claim the funds. If the trustee doesn’t, and you listed the payment and exempted it in your schedules, then you can usually demand they be refunded to you. Speak to your attorney about this. If you are acting pro se’ then you will want to contact the trustee and find out if he/she will be pursuing the transfer. If not make sure the transfer is listed and exempted in your schedules (you can make an amendment if necessary) and then make a demand on the creditor.
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