In bankruptcy, the Court wants to treat all creditors in the same class equally. For example, the Court doesn’t want one credit card to get lots of money back while others get none. To even things out, the Court has something called “preferences”. If a particular creditor gets more payments in the 90 days (1 year for repayments to friends or relatives) before filing than they would in the bankruptcy, the Court can undo the transaction and force the creditor to refund the money to the Court for redistribution to creditors.

This is beneficial for garnishments as it allows a debtor to recover the money from the creditor. This can be a problem if you repay a relative or friend as the Court will demand that the relative or friend pay that money to the Court. So if you are planning on repaying a friend or relative before filing bankruptcy, DON’T. If you have, make sure to tell your attorney. There may be ways to avoid the preference.