One of the first places a person turns to when they are experiencing financial difficulty is their family. At least once a week I meet with someone to discuss bankruptcy who has either borrowed money from or received monetary gifts from a parent or sibling to help them weather the financial storm.
Just about everyone who has a family debt and seeks to file bankruptcy wants repay their family before filing. I understand why people with to repay their family – they want to protect them from the bankruptcy. Unfortunately, without knowledge of the bankruptcy laws, it is difficult to know how to appropriately do this. There are ways to protect your family, but you should seek an attorney’s advice and guidance through the process.
If you are considering bankruptcy, the one thing you should avoid doing is to pay these family members back prior to filing. Such a payment would be considered a preference and could cause some undesired results in your bankruptcy. Either the court will require your family member to turn over the payments you gave your family, or you will have to give the court the same amount of money as you paid your family members.
The best thing to do is to wait to pay your family back after the bankruptcy is filed. If however, you are considering filing bankruptcy and you have already paid money to a family member, it is not the end of the world.
To set up your FREE consultation with Benjamin Skinner, experienced Arizona Bankruptcy Attorney and determine your options to remedy the situation, call (480) 648-8975 today!