Insider of Individual Debtor

IN-sid-er of in-di-VIJ-u-al DEB-tor
In bankruptcy law, an insider of an individual debtor is a person or entity with a close relationship to the debtor, such as a family member, business associate, or affiliated company. Transactions between insiders and the debtor are subject to heightened scrutiny in bankruptcy proceedings to prevent fraudulent transfers of assets.
The bankruptcy trustee investigated the sale of property to the debtor's spouse, as the spouse would be considered an insider.
In re Jones (2023), the court avoided the debtor's transfer of money to their business partner, who was considered an insider, as it was deemed a fraudulent attempt to shield assets from creditors.
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Frequently Asked Questions

Transactions with insiders are more likely to be fraudulent because insiders may be willing to cooperate with the debtor to hide assets or manipulate the bankruptcy process. This scrutiny helps ensure fairness for creditors in recovering what they are owed.

Transactions with insiders that occur shortly before filing for bankruptcy, for little or no consideration, or that benefit the insider at the expense of creditors are more likely to be challenged.

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