We had an interesting situation this week that turned out badly for the debtor.
We had trustee request information from the debtor in regards to a PayPal transfer of $1,000 the day before the debtors bankruptcy petition was filed.
What is PayPal?
PayPal is an e-commerce business allowing payments and money transfers to be made through the Internet. PayPal serves as an electronic alternative to traditional paper methods such as checks and money orders.
A PayPal account can be funded with an electronic debit from a bank account or by a credit card. The recipient of a PayPal transfer can request a check from PayPal, establish their own PayPal deposit account or request a transfer to their bank account. PayPal is an example of a payment intermediary service that facilitates worldwide ecommerce.
PayPal performs payment processing for online vendors, auction sites, and other commercial users, for which it charges a fee.
Needless to say, this money transfer less than 24 hours before filing the bankruptcy petition looked really suspicious. The interesting thing though, is that it turned out to be completely legitimate.
What had happened is that the debtor had paid his attorney fees to the attorney electronically using his PayPal account. Why is this problem? Well…it isn’t. The problem came in as being that the PayPal account had not been disclosed on the bankruptcy petition, and even though the attorney was able to verify that he had received the payment, the money didn’t clear before the petition was filed, and the trustee did not allow it, and said “That money, and anything else in the PayPal account is mine”. Ouch!
The moral of the story is that we now live in a digital world, and people are now using digital means to make purchases and pay bills. This being the case, it is very important to help the debtor to disclose ALL bank accounts…even PayPal.
The conclusion? The attorney is going to continue to take payment via PayPal; he is just going to make certain that it is documented on the petition.
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DISCLAIMER: We at 713Training are not attorneys; any information provided by 713 Training should not be considered legal advice. The information in this article, and any other materials provided by 713 Training, whether delivered verbally, written or via any other means, including electronic/digital delivery and storage, is for training purposes only, and is intended for individuals who work under the direction of a licensed attorney.
