This is one of the most common — and most emotional — questions we hear:

“My parents helped me when I was struggling. Can I pay them back before I file bankruptcy?”

It feels like the right thing to do.

But legally, it can create a serious problem.

Let’s explain why.

📌 Bankruptcy Is About Equal Treatment

Bankruptcy law is built on one core principle:

All similarly situated creditors must be treated equally.

If you repay one creditor in full right before filing — especially a family member — while other creditors get nothing, that’s considered preferential treatment.

Even if your intentions were good.

⏳ The One-Year Rule for Family Members

When it comes to repaying family, the rules are stricter.

Trustees can look back:

• 90 days before filing for regular creditors
• 1 year before filing for “insiders” — including parents, siblings, children, and close relatives

If you repay your parents within one year before filing, the trustee can demand that money back.

💰 What Happens If I Already Repaid Them?

If you repaid your parents within that one-year window:

• The trustee may send them a demand letter.
• If they refuse, the trustee can file a lawsuit (an adversary proceeding).
• Your parents could be required to return the money to the bankruptcy estate.

It doesn’t mean you did something criminal.

It means the law requires fairness among creditors.

🚩 Does This Affect My Discharge?

Usually, no — as long as:

• You fully disclose the repayment.
• You did not conceal it.
• You are transparent in your filings.

Failing to disclose the transfer is far more dangerous than making it.

Honesty protects your discharge.

🤔 What If It Was Just a Small Amount?

Trustees generally look at:

• Total payments made
• Whether the amount justifies recovery
• Administrative cost vs. benefit

Small payments may not be pursued — but there’s no automatic safe amount.

Every case is fact-specific.

💡 What Should I Do If I Want to Repay Them?

Before making any repayment:

✔ Speak with a bankruptcy attorney.
✔ Review the timing of your planned filing.
✔ Consider whether waiting to file changes exposure.
✔ Discuss whether repayment after discharge makes more sense.

In many cases, it’s safer to file first — then voluntarily repay family later if you choose.

📌 Bottom Line

Repaying your parents before filing bankruptcy can create a preference problem.

The trustee can recover those funds — even if your intentions were honorable.

The safest path is:

• Full disclosure
• Careful timing
• Professional advice before transferring money

Bankruptcy isn’t about punishing family support — it’s about ensuring equal treatment under the law.