If you paid money or transferred any property to a relative, friend, or business associate (known as an "insider") within a year prior to filing bankruptcy, for repayment of debt, a bankruptcy trustee may be able to recover the money or property for the benefit of all of your creditors. The payment to the insider is known as a "preferential transfer". The bankruptcy code permits the trustee to recover such a payment for several reasons. The main purpose is to prevent debtors from being able to PREFER certain creditors over other creditors.
For example, you owe your parents money and have balances on several credit cards. You decide that you will need to file bankruptcy in the near future. Since you do not have enough cash to pay all of your creditors, you decide to pay off the loan to your parents instead of making payment to the credit card companies. If you then file bankruptcy within the year of the payment, you have engaged in the classic preferential transfer! You "preferred" your parents over the credit card companies. I don't blame you for that reasoning! Unfortunately, you cannot engage in this activity without potential consequences.
You must disclose in your bankruptcy filing such a repayment if it occured within the year of filing. The trustee may seek to collect payment directly from the insider, including filing a lawsuit to collect.
It is imperative that you disclose any such transactions to your bankruptcy attorney prior to filing. The attorney may determine you need to wait to file until the preference window closes to avoid the insider having to refund the payment to your bankruptcy estate. More importantly, if the transfer is not disclosed in your bankruptcy, you may be accused of intentionally misleading the court concerning your financial affairs which could result in a denial of your discharge!