Disclosing Payments Made to Creditors Within the Last 90 Days in Bankruptcy

Introduction

When you file for bankruptcy, you must disclose any payments made to creditors in the 90 days before filing. This rule helps the court ensure all creditors are treated fairly and prevents favoritism. If you paid one creditor more than others, the trustee may be able to recover that money and redistribute it.

Why the Court Requires Disclosure

• Fairness: Bankruptcy law requires creditors to be treated equally.

• Preventing Preferences: Paying one creditor while ignoring others is considered a “preferential transfer.”

• Transparency: Trustees need a full picture of your financial activity before filing.

The 90-Day Look-Back Period

• Applies to all creditors (credit cards, loans, medical bills, etc.).

• Any payment over $600 total to a single creditor in the 90 days before filing must be reported.

• For insiders (like family members or business partners), the look-back period is 1 year.

Examples of Payments That Must Be Disclosed

• Making extra payments on a credit card or personal loan.

• Paying off a friend or family loan before filing.

• Catching up on rent or utilities.

• Large lump-sum payments to avoid collection.

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What Happens if You Don’t Disclose?

• Trustee Investigation: Trustees cross-check your bank statements, credit reports, and pay stubs.

• Reversal of Payments: The trustee can “claw back” payments and redistribute funds among creditors.

• Risk of Fraud Allegations: Failing to disclose may be viewed as dishonest and could jeopardize your case.

Common Mistakes to Avoid

• Forgetting small recurring payments (auto-pay bills).

• Not disclosing family repayments, thinking they don’t count.

• Assuming under $600 doesn’t matter — while the $600 rule applies to creditors, all insider payments must be disclosed regardless of amount.

• Trying to hide cash withdrawals made to pay debts.

Practical Tips

1. Review your last 3 months of bank statements carefully.

2. Highlight all debt payments, no matter how small.

3. Tell your attorney about family or insider repayments.

4. Be upfront — it’s better to disclose too much than too little.

Why Honesty Is Critical

Bankruptcy is about getting a fresh start, but it requires full transparency. Trustees understand that many people try to “do the right thing” and repay friends or family before filing — but if you don’t disclose it, you risk losing your discharge.

Conclusion

Disclosing payments to creditors within the last 90 days is not optional — it’s required. By being thorough and honest, you protect your case, avoid unnecessary complications, and ensure your creditors are treated fairly under the law.

💡 Next Step: Collect your last 90 days of bank statements before meeting with your bankruptcy attorney to make sure every payment is accounted for.