June 2, 2011

Transferring Assets Prior to Bankruptcy

Posted in Bankruptcy tagged at 6:58 am by demetriagraves

A common question I get asked regarding bankruptcy, is whether you can simply “give” away your assets to a family member or take your name off of the title to a vehicle or home prior to filing bankruptcy. This question usually arises when someone is looking to file a chapter 7 bankruptcy, the reason being that in a chapter 7 bankruptcy, in some circumstances, it’s possible lose non-exempt assets. The bankruptcy trustee can seize them and sell them to pay your creditors. So many people consider giving away certain assets to family in the hope of being able to protect those assets.

Many of your assets are considered exempt, such as your personal possessions and often your home is exempt. So transferring assets may be unnecessary and will just bring about additional unwanted scrutiny to your case.

Generally the answer is no, you should not transfer any asset or give anything away prior to filing bankruptcy. If you do the bankruptcy trustee will likely view that as a fraudulent transfer and go after that asset. In the case of a transfer of an asset to a family member the procedure for getting the asset back is for the bankruptcy trustee to sue the family member to get an order requiring them to turn over the asset. Having the federal government sue your family over an asset you gave them makes future family reunions very awkward. The look back period on such transfers is two years.

My general advice to avoid transferring assets prior to filing bankruptcy. This applies mostly to situations where you are literally giving away property and not receiving anything in return. You can however sell property prior to bankruptcy so long as you receive fair market value for whatever it is you are selling. For instance, you can sell your car prior to your bankruptcy filing, but if the car is worth $3,000, you are going to need to get somewhere near that number – you can’t sell it for $300 without running into possible issues in the bankruptcy court. But if you get approximately what it is worth, then you will generally be fine when it comes to filing bankruptcy.

If you have further questions about bankruptcy and whether it’s right for you. I offer a free 30 minute telephone bankruptcy consultation where we can discuss your specific situation and you can get your questions answered. So what are you waiting for?


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: