Look-Back Period

What does a look-back period mean?

A look-back period is a stretch of time measured backwards from the date the bankruptcy petition is filed. The Bankruptcy Code uses these windows to decide which past events a case may examine. The phrase implies nothing about wrongdoing; it is a measuring device, not an accusation.

There is no single look-back period. Different provisions set different windows because they answer different questions. 11 U.S.C. § 548 concerns certain transfers and obligations made or incurred on or within 2 years before the petition. 11 U.S.C. § 547 concerns certain transfers to a creditor made on or within 90 days before filing, and between ninety days and one year before filing where the creditor was an insider. 11 U.S.C. § 522(b)(3)(A) uses a different kind of window entirely: it looks at where you were domiciled, not at what you transferred.

Every one of them is counted from the filing date, so the day a case is filed fixes all of them at once.

Why does it matter in a bankruptcy case?

Filing creates an estate under 11 U.S.C. § 541, and a trustee is charged with examining what belongs in it. The look-back periods set how far back that examination reaches.

Two consequences follow for most consumer filers. First, money or property that left your hands shortly before filing can still be examined: a payment to one creditor ahead of the others, a car title signed over, a repayment to a relative. Whether anything is undone depends on the elements the relevant section requires, not on the calendar alone.

Second, the domicile window in 11 U.S.C. § 522(b)(3)(A) decides which state's exemption law applies to the case. That one question can change which property the case reaches, so it often matters a great deal to someone who has moved recently. Exemption amounts themselves differ from state to state, and your state page is where to look them up.

How does a look-back period work in practice?

The windows are counted backwards from the petition date, and the schedules and statement of financial affairs ask you to report what falls inside them. Answering accurately is the whole of the filer's job here; what to do with the answers is for the trustee or another party in interest.

Two related deadlines run the other way. Under 11 U.S.C. § 546(a), an action under the avoiding-power sections that provision lists may not be commenced after the earlier of the time the case is closed or dismissed, or the later of two things: 2 years after the entry of the order for relief, or 1 year after the appointment or election of the first trustee under the sections named there, where that appointment or election happens before the 2-year period ends. Under 11 U.S.C. § 549(d), an action over a postpetition transfer runs to the earlier of two years after the transfer or the closing or dismissal of the case.

What do people get wrong about look-back periods?

Four mistakes come up repeatedly.

The first is calling 2 years 'the fraudulent transfer look-back'. Two years is the reach of 11 U.S.C. § 548. Other theories, including state law made available to the trustee through 11 U.S.C. § 544, have their own reach.

The second is reducing § 548(a)(1)(B) to 'less than reasonably equivalent value plus insolvency'. Receiving less than a reasonably equivalent value is only the first element. The second is satisfied by any of the statute's alternatives: insolvency then or as a result, unreasonably small capital for a business or transaction, intending or believing that debts would be incurred beyond the ability to pay them as they matured, or a transfer to or for an insider under an employment contract outside the ordinary course of business.

The third is reading 'insider' as 'business partner'. 11 U.S.C. § 101(31) specifies who counts, including relatives and certain partnership and control relationships.

The fourth is assuming a date inside a window settles the outcome; it does not.

Frequently asked questions

Does a look-back period mean I did something wrong?

No. A look-back period is a measuring window, not a finding. Ordinary payments, ordinary sales and ordinary moves fall inside these windows constantly. Whether anything follows depends on the elements the relevant section of the Bankruptcy Code requires. What the forms ask of you is an accurate report of what falls inside the window.

I moved to another state recently. Which exemptions apply?

Two separate things are in play. Which state's exemption law applies is set by 11 U.S.C. § 522(b)(3)(A): the state of domicile for the 730 days before filing, or, if domicile was not in a single state, the state of domicile for the 180 days before that period, or the longer part of it. Separately, the federal list in 11 U.S.C. § 522(d) does not vary by state and may be elected where the applicable state has not opted out.

If a transfer is avoided, who has to return the property?

11 U.S.C. § 550 sets that out, and it distinguishes among recipients. Where a transfer is avoided, the trustee may recover the property, or its value if the court so orders, from the initial transferee or the entity for whose benefit the transfer was made, and from immediate or mediate transferees of that initial transferee. The section carries its own defenses and limits, including protection for certain good-faith transferees.

Sources

• 11 U.S.C. § 522 · official source
• 11 U.S.C. § 548 · official source
• 11 U.S.C. § 547 · official source
• 11 U.S.C. § 546 · official source
• 11 U.S.C. § 549
• 11 U.S.C. § 550 · official source
• 11 U.S.C. § 544 · official source
• 11 U.S.C. § 541 · official source
• 11 U.S.C. § 101 · official source

Related

• The 180-Day Venue Rule and Exemption Lookback Periods
• Bankruptcy Estate
• 11 U.S.C. § 101 — Definitions
• Bankruptcy glossary
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