By Ullian Associates of The Law Firm of Ullian & Associates, P.C. on May 14, 2015
Most people have certain debts they want to pay off first when they have the money, such as loans from family and friends. If you are considering filing a bankruptcy paying off family and friends can be an issue and you should discuss this with your bankruptcy attorney. Payments to certain creditors within a close time period to a bankruptcy filing can be a preferential transfer. Bankruptcy law does not allow you to give preferential treatment to certain creditors, even if you are related to them. The Trustee has the power to review your financial records. If the Trustee, for example, determines you repaid your cousin $20,000 within 90 days of your bankruptcy filing, the Trustee will seek to void that transfer and recoup the money from your cousin to be redistributed to all of your creditors. Knowing that you are filing bankruptcy soon, does not give you the freedom to spend your money any way you want prior to the bankruptcy.
For more information on bankruptcy or to schedule your free consultation with The Law Firm of Ullian & Associates, P.C., contact us here.