If you file for Chapter 7 or Chapter 13 bankruptcy, you must complete forms that disclose your income, expenses, debt, and the types of real property (real estate) and personal property you own. One of the forms is called the Statement of Financial Affairs for Individuals Filing for Bankruptcy.

On this form (which you may find and complete on the uscourts.gov website) you will list financial transactions you made up to ten years before you filed for bankruptcy. The bankruptcy trustee will review these transactions and may undo a sale, gift, or transfer of property the trustee determines should be used to pay your creditors. Sales, gifts, debt payments, and transfers of property to your friends and family members are known as insider payments, and will receive the most scrutiny.

In Illinois, as in all states, when filing for Chapter 7 or Chapter 13 bankruptcy, debtors are required to complete and submit various forms that provide a detailed account of their financial situation. One of these forms is the Statement of Financial Affairs for Individuals Filing for Bankruptcy. This form requires the disclosure of significant financial transactions that occurred up to ten years prior to filing for bankruptcy. The purpose of this disclosure is to allow the bankruptcy trustee to examine these transactions for any irregularities, such as preferential transfers or fraudulent conveyances. If the trustee identifies transactions that improperly disposed of assets that could have been used to repay creditors, they have the authority to potentially reverse these transactions. Transactions involving friends and family, known as insider payments, are particularly scrutinized to ensure that all creditors are treated fairly and equitably in accordance with federal bankruptcy laws and Illinois state statutes.