Section 547(b)(4)(B) of the Bankruptcy Code that the trustee may “avoid” (meaning reverse or void) any transfers made to any insider within a year from filing the bankruptcy petition.
Under the Bankruptcy Code, family members are insiders. This provision is especially important if you have been paying back a loan from a family member. You must disclose such payments on your Statement of Financial Affairs. If the trustee is inclined, she could force the family member to cough up whatever amount you paid to him, so that the trustee can distribute the funds to the rest of your creditors.
This is just one of the many complex issues that can arise in personal bankruptcy, and why you should consult with a Colorado bankruptcy attorney to learn what your rights and obligations are.