If you’re thinking about filing bankruptcy, one of the most important things to do first is review your recent financial activity.
Many people unintentionally create problems by moving money or property before filing.
Before you file, here are the key transfers you should carefully review with your attorney.
📅 Why Transfers Matter
When you file bankruptcy, the trustee will typically review:
- The 90 days before filing (for regular creditor payments)
- The 1 year before filing (for payments to family or insiders)
- The 2 years before filing (for fraudulent transfers under federal law)
- Sometimes longer under state law
The trustee’s job is to ensure fairness and full disclosure — not to punish you — but timing and documentation matter.
💰 1️⃣ Payments to Family or Friends
This is the most common issue.
If you repaid:
- Parents
- Siblings
- Children
- Close friends
Within the last year, the trustee may try to recover those funds.
Even if it was a legitimate loan.
Even if your intentions were honorable.
These are called insider preference payments.
💳 2️⃣ Large Payments to Credit Cards or Loans
If you:
- Paid off one credit card in full
- Settled a lawsuit
- Made a lump-sum loan payment
Within 90 days before filing, it may be considered a preference.
The trustee can seek repayment from that creditor.
🎁 3️⃣ Gifts
If you:
- Gave someone money
- Paid someone’s bills
- Contributed to a wedding
- Helped a relative financially
While you were insolvent, it may be reviewed as a fraudulent transfer.
Small routine gifts are usually not an issue — but large gifts can be.
🚗 4️⃣ Vehicle Transfers
Did you:
- Transfer a car title?
- Add someone to a vehicle?
- Sell a vehicle to a relative for less than it’s worth?
These are red-flag transactions if done within the lookback period.
🏠 5️⃣ Real Estate Changes
Did you:
- Add someone to your deed?
- Transfer ownership of property?
- Quitclaim property to a family member?
These transfers are closely examined and can create major litigation if not handled properly.
💵 6️⃣ Large Cash Withdrawals
Trustees look carefully at:
- Cash withdrawals
- Cash deposits
- Money orders
- Unusual ATM activity
If cash was withdrawn, you may need to explain where it went.
📱 7️⃣ Digital Transfers (PayPal, Venmo, Cash App)
Trustees routinely request:
- PayPal statements
- Venmo activity
- Cash App records
Transfers to individuals through digital apps are treated the same as bank transfers.
💼 8️⃣ Business Transfers (If Self-Employed)
If you:
- Paid yourself irregularly
- Repaid business partners
- Moved assets between entities
- Closed business accounts
Those transactions require careful review.
💎 9️⃣ Sale of Assets
If you sold:
- Jewelry
- Electronics
- Equipment
- Collectibles
The trustee may examine whether you received fair market value.
Selling assets below value can be challenged.
🧾 🔟 Loan Repayments of Any Kind
Even informal loans count.
If someone loaned you money and you repaid them, it must be disclosed — especially if within one year.
🚩 What Happens If There’s a Problem Transfer?
Possibilities include:
- Trustee demand letters
- Settlement negotiations
- Adversary proceedings
- Recovery from the recipient
However, most issues are manageable if disclosed early.
The real danger is concealment — not the transfer itself.
✅ What Should You Do Before Filing?
✔ Do not move money without advice.
✔ Do not repay family.
✔ Do not transfer property.
✔ Continue normal living expenses only.
✔ Review the past 1–2 years of activity with your attorney.
Planning before filing can prevent major complications later.
📌 Bottom Line
Bankruptcy requires transparency.
Before filing, review:
- Who you paid
- What you transferred
- When you transferred it
- Why you transferred it
A short conversation before filing can save months of litigation after filing.
If you’re considering bankruptcy, pause major financial decisions until you’ve received legal guidance.
