The whole idea of bankruptcy is premised upon an equalization of the playing field and giving the debtor a fresh start.

The playing field is equalized by preventing one creditor being paid in advance of another.  This is called a “preference” under Section 547 of the Bankruptcy Code.

It plays itself out in this fashion.

There is one creditor (or more than one) that the debtor for one reason or another wants paid in front of other creditors.  Perhaps this is a loan company that has been particularly helpful during difficult times.  Perhaps it’s a lender that has a relationship with the debtor’s family.  Perhaps the preferred lender is actually a family member.

For non-insiders (mostly family members) there is a 90 period prior to your bankruptcy filing that the trustee can recover payments.  If the payment is to a family member then the period is one year.  Be aware of this and be sure to tell your bankruptcy attorney about the payments.  Even one day past the applicable time period protects the payments.

The second issue with eve of bankruptcy transfers (of cash or property) is a transfer of an asset to a family or friend.  Any transfer of a car, boat, or motorcycle that is made immediately before the filing of your case will raise the suspicion of the trustee.  You don’t need that.  The trustee will assume, unless you can prove otherwise, that the transfer was made in order to hide or conceal assets.

Transferring assets in an attempt to conceal them from your creditors, including the bankruptcy trustee, can cost you your discharge.

DON’T DO IT!

Be sure to discuss candidly any transfers with your bankruptcy attorney before you file your case.  Don’t try to game the system.  Get full advantage of your bankruptcy by getting your discharge.