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Family Debt

My sister in law has money from the sale of her home. She owes family members money that she had to borrow to stay alive. She wants to pay them back now but I know eventually she will end up going bankrupt .She makes all the minimum payments each month on all credit cards but her debt load is out of control. She will not be able to sustain much longer.
What will happen if she pays her family members back before she goes bancrupt.

One Response to “Family Debt”

A licensed trustee said...

Unfortunately, if your sister-in-law repays some of her debts prior to filing for bankruptcy these payments may be considered a “preference”. That means her trustee will be required to contact each of the people that was paid and ask for the money to be returned. If it is not returned then your sister-in-law may be held responsible to pay an equal amount to all of her other creditors as a condition of her bankruptcy.