Law Office of Timothy E. Wilfong, LLC

You Deserve a Fresh Start - Phoenixville, PA


Call us at 610-935-5555 for a Consultation

Helping Clients Since 2008


 
 
 
Law Office of Timothy E. Wilfong, LLC
20 S. Main Street, Phoenixville, PA 19460
 
 
 
Can I repay a loan I owe to a family member before filing for bankruptcy?


 
 You Deserve a Fresh Start

Can I repay a loan I owe to a family member before filing for bankruptcy?

 

This Catch-22 falls under the category of the saying "no good deed goes unpunished."  Of course individuals who are in financial dire straits would rather pay what little they can to a family member who loaned them money in the form of a personal loan rather than a credit card, prior to filing bankruptcy.  However, this is where the Catch-22 comes into play. 

 
The bankruptcy trustee can actually file a lawsuit against your family member for the money you paid them on the personal loan prior to filing the bankruptcy petition.  In bankruptcy terminology this is called a preference.  In other words, a person preferred one creditor (i.e. family member) over other creditors (i.e. credit cards).  The trustee will distribute the proceeds from the lawsuit against your relative to the unsecured creditors evenly.
 
If you are considering filing bankruptcy then please contact the Law Office of Timothy E. Wilfong, LLC at 610-935-5555 to review your options.