Insider Creditor/Family Member

[BKWonderer]

Hello!

Suppose a family member makes a purchase (let's say something as simple as a dress) on your behalf with their own money and you later repay them for the purchase within a year of filing for bankruptcy, is the family member considered an insider creditor?

[justbroke]

Welcome to BKForum.

Yes, they are an insider, but so long as you p aid your other creditors their "minimum" required payment, it's not an issue. Also, I don't know of any Chapter 7 Trustee that is going to worry about the value of a dress, unless this is a very expensive dress. Even then, the value of an expensive dress is your property and would likely need to be listed under Clothing with its current value.

If we were talking about a scenario where your family member loaned you $5,000 and you paid them back but didn't pay your creditors during that time, then that could be an issue. The trustee might try to claw back the money in that situation because that's a good chunk of change. I don't see a Trustee worrying about a $100 dress that is 1-year old, worn, used, and likely worth only $10 at a yard sale.

[BKWonderer]

Thank you!