QUESTION
Can I pay my father back a business loan with the sale of my house, and then declare bankruptcy for all bank debts
Asked on Jun 08th, 2021 on Bankruptcy - Pennsylvania
More details to this question:
My business went under due to covid, I'm selling my house, there is not enough money to cover debts, but I want to pay my father back first, we have a bank statement paper trail for loans from my father. Need to know my options.
1 ANSWER
You can do it but the payment to your father will be undone as a preference. You can’t prefer one creditor, particularly an unsecured creditor as I assume your father is, over another within 90 days of filing bankruptcy or, in the case of an insider, 1 year. This is particularly true where one of the creditors losing out is a secured creditor, as I assume the bank is.
Answered on Jun 09th, 2021 at 6:43 AM