Paying A Family Member Before Bankruptcy

2010-02-18   minute read

Linda Paul


No, that can actually cause you problems in a bankruptcy. 

Person talking on a cellphone looking at spreadsheets on their laptop

One of the basic elements of bankruptcy is that you have to treat all of your creditors the same.  If you choose one creditor and pay them but leave the others to be dealt with in the bankruptcy, that's considered to be unfair.  If you do this (especially if it's with a related party), it's pretty likely that you'll have trouble getting your Discharge (which is the final step in a bankruptcy - it's the step that extinguishes your debts and 'sets you free.')  In most cases, the court will require you to pay into the bankruptcy an amount equal to what you paid to the family member before they will give you your discharge.

Consultation icon