After 4 years ago i borrowed money from my brother. Since then i have continued borrowing from my brother and now i owe him about $140,000. This is a lot of money for me, but not for my brother who is a surgeon and makes that every other month. Well, i am having serious financial difficulty and i would like to transfer my house to my brother prior to filing bankruptcy. My question is whether the bankruptcy court would object to the transfer prior to me filing bankruptcy or if i need to do the transfer after i file? I was told that any transfer prior to filing bankruptcy would be considered a preference.

Transfers within 90 days of filing bankruptcy need to be disclosed to the court. The idea behind a preference payment is that the debtor (i.e. you) chose to pay a certain creditor instead of other creditors – the debtor “preferred” this creditor. Preference payments are unfair to the debtor’s other creditors, and, if the transaction took place within 90 days, the bankruptcy trustee can compel the turnover of this preference payment to the bankruptcy estate for equal distribution to all creditors. And there is one other important caveat to preference payments: if the payment is made to an “insider,” then the avoidance period is one year. An “insider” is a generally a relative, business partner, etc. who has a special relationship with the debtor.

Based on my experience, transfers within 90 days of filing bankruptcy will be reviewed by the bankruptcy trustee for legitimacy and could be classified as a preference. If the sale was for full and adequate consideration then the sale will likely be update.

"Preferential transfers under federal bankruptcy law are generally defined in 11 U.S.C. § 547(b), although a number of other sections provide definitions and other rules used to determine how the elements are applied. Section 547 provides that the trustee may avoid (set aside) transfers of the debtor's interest in property:

to or for the benefit of a creditor;
for or on account of an antecedent debt owed by the debtor before such transfer was made;
made while the debtor was insolvent;
made - (A) on or within 90 days before the date the petition was filed; or ( if the creditor was an insider, on or within one year before the date the petition was filed; and
that enabled the creditor to receive more than the creditor would have received if - (A) the case were a case under Chapter 7 of the Bankruptcy Code; ( the transfer had not been made; and (C) the creditor received payment of such debt to the extent provided by the provisions of Chapter 7

transfers to family within 2 years of the transfer are automatically considered preferences.

When the transfer is between related parties, the trustee does not have to prove that the debtor was trying to improve the position of the creditor, or that the creditor was trying to beat other creditors to the punch. If a payment or a transfer has the effect of improving one creditor’s position relative to other creditors, and no defenses exist, the trustee is entitle to recover the value of the transfer.