Bankruptcy law requires that debtors filing for any chapter of bankruptcy disclose on the Statement of Financial Affairs any payments of at least $600 they made to creditors 90 days prior to filing for bankruptcy. The payments disclosures will include payments made on the following types of debt:
- Car Loans
- Gas, Electric, water and other utility bills
- Credit card payments
- Medical Bills
- Student Loans
- Taxes (Federal, State and Local)
- Any types of domestic support payments; including alimony and child support
- Payments to any other type of creditor (not including inside creditors such as family and friends)
One of the things the bankruptcy court will examine is whether or not a debtor transferred assets to another creditor in the form of payments. For example, if a debtor paid a credit card lender $1,000 while only given another a minimum payment, the bankruptcy court may rule that the debtor favored one creditor over another. If it is determined that the debtor favored one creditor over another then the bankruptcy court may order that the creditor return the money they received to the bankruptcy estate. However, if a the debtor made a $1,000 payment to that same creditor 100 days before they filed bankruptcy, then that would not be disclosed in the bankruptcy filing because it is beyond the 90 day threshold that the bankruptcy court is looking at.
In the case of payments made to inside creditors such as family and friends, the bankruptcy court requires that the debtor list the payment regardless of what the amount was. For example, if a debtor paid their mother $400 on a loan; but paid nothing on a medical bill, the bankruptcy court may rule that the debtor's mother must return that money to the bankruptcy estate. Also, debtors need be aware that the bankruptcy court will look at asset transfers or payments made to insiders such as family and friends for up to a year prior to the bankruptcy filing to determine if there was an illegal transfer of assets.