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Paying Relatives Prior to Bankruptcy

By Richard K Gustafson, II

One of the questions asked of debtors filing for bankruptcy is whether or not he/she has transferred any “money or property” within the last one year. Why does the bankruptcy trustee care about that?

Payments to family members give rise to suspicion that the debtor is attempting to hide assets from creditors by disguising gifts to family members as “loan repayments.” It’s possible someone could give a family member money so it won’t be lost when filing for bankruptcy.

If you have given a family member money, even for a perfectly legitimate reason like paying back money you’ve actually borrowed from them, the person that the trustee will sue to get the money or property back will be the family member you thought you were helping by paying them your money! All you would be accomplishing is getting your family member sued by a bankruptcy trustee, potentially. This would make things worse for you and your family, not better.

This entry was posted on Thursday, April 20th, 2006 at 4:41 pm and is filed under Bankruptcy Blog. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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ABOUT THIS BLOG:

Richard K. Gustafson, II is an attorney with LegalHelpers.com writing on topics related to bankruptcy from the consumer's perspective. To send comments to Rick, email Blog@LegalHelpers.com.


The Bankruptcy Blog from LegalHelpers.com is produced from the law firm of Macey & Aleman, one of the nation's largest bankruptcy firms. A blog does not create an attorney-client relationship and is not a substitute for specific legal advice from an attorney analyzing your specific set of facts. If you are interested in obtaining information about bankruptcy, you are encouraged to call our law firm at 888-743-5787 or complete our online evaluation for a confidential, risk-free analysis!

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