Each state has its own laws about how far back fraudulent transfers can be pursued, so the trustee may be referring to your state's fraudulent transfer act. I do not know that the trustee would actually try to go back 6 years and recover money, though your state law may permit such an attempt.
Are you sure the payments are recoverable by the trustee? If the payments were made in the ordinary course of business, then sometimes the trustee loses on their attempt to deem the preferential payments as avoidable. So, if you can show the court that the monthly payment was a regular payment on an existing debt and was in the ordinary course of your financial business, the trustee may lose.
The implicition that the trustee may go back 6 years if you do not settle might just be a tactic designed to get you to not challenge whether the preferential payments are avoidable by the trustee, and may in fact make it worth your not pursuing a defense; i.e. it may be cheaper to settle with the trustee for the last year's worth of activity than potentially opening up the last 6 years worth of transactions.
I suggest asking your lawyer about these issues. I'm sure your lawyer has already reviewed the details, but just in case he or she didn't, it might be worth looking into.
I hope this helps and a positive feedback is always appreciated if this was useful to you.
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It is fairly common for trustees to go after payments made to friends and family members within the one year period prior to filing. It is much less common for a trustee to try to employ a state's fraudulent transfer act, but I am not surprised a trustee may threaten to do so to grease the wheels of a settlement for the one year period.
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