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socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 37871
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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Hi I filed bankruptcy and waiting for discharge but prior to

Customer Question

Hi I filed bankruptcy and waiting for discharge but prior to filing I paid some money to my father and sister in law and now they are being sued by the trustee to get money back form them to trustee what can be done to prevent this and how often das this hapen
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 7 years ago.

The trustee must either go after the money or ask the court to dismiss your entire bankruptcy petition due to fraud. Even if he can't collect, he has a duty on behalf of your creditors to try to collect any asset transfers that you made which can be reasonably avoided.


If your relatives or you can show that each paid you "reasonably equivalent value" for the assets transfered, then that will defeat the lawsuit. But, if you just gave them money to hide it from your creditors, then you could be in some trouble and it's better for your relatives to turn the property over, than to risk the costs of litigating the "fraudulent transfer" (which is what this sort of transaction that you've descrivbed is called under the law).



Customer: replied 7 years ago.
so what do i need to show father loaned me money to buy truck over four years ago and sister loaned me mone to fix the truck a year ago what i need to show to trustee to get this resolved do i need some sort of agreement that i need to repay this or what//
Expert:  socrateaser replied 7 years ago.

If there were a promissory note made out by you in favor of your father's loan and sister's loan, from several years prior to the bankruptcy, then that could be useful. But, the question will be, why did you pay them off and not go bankrupt on your debts to them?


You will say because they are family, and your creditors will say "fraud." You could certainly try this gambit -- I have no idea if it would succeed. It really depends on how much money is involved and whether you made any payments prior to the payoffs immediately before bankruptcy. It doesn't smell real kosher, so I wouldn't bet on your chances of success.



Customer: replied 7 years ago.
so what is your advice as expert on this and my best way to go about it
Expert:  socrateaser replied 7 years ago.

I can't give you advice. If your father/sister-in-law loaned you money to buy/repair a truck, then there should be either a note or a check or something evidencing the transaction and the repayments. If none of those exist, then that's a problem, and your relatives may want to consider returning the money to the bankruptcy trustee, in exchange for a voluntary dismissal of the lawsuits against each of them.


Frankly, you may want to seriously consider discussing your situation IN PRIVATE consultation with a criminal defense attorney -- rather than chatting with me in this public forum. I don't know how much money is involved, but you all could be charged with criminal bankruptcy fraud.