A general rule of thumb prior to filing bankruptcy is try not to sell, transfer, or get rid of your property unless you have discussed it with your bankruptcy attorney first. The reason is, transfers, sales and even trade-ins prior to filing are heavily scrutinized by the case Trustee.
Transfers of any kind are looked at particularly close in the two to six years prior to filing to make sure you were not getting rid of your property to hinder, delay, or defraud your creditors. Always get your attorneys thoughts on a transfer, because even though you may not have an intent to hinder your creditors, it may come off this way.
For example, let’s say you give your sister your old car worth $1,200 right before filing a chapter 7 bankruptcy. Her car recently broke down and you have a newer vehicle you are driving. If sister doesn’t pay you for the vehicle, this will be seen as a fraudulent transfer as you received less than fair market value for the transfer. The trustee in your case may try to claw back the transfer for the $1,200.
Another example, similar to the above, let’s say sister pays you $1,200 (but the vehicle was really worth $2,000), prior to filing a chapter 7 bankruptcy. You cut her a deal because you weren’t using the vehicle and she could really use it. Although you were helping you sister, this is a fraudulent transfer as well, because fair market value was not received. The trustee will likely want the difference of the value received and value the vehicle actually was. In this example, $800.
CALL NOW FOR A FREE STRATEGY SESSION FROM A MN BANKRUPTCY LAWYER AT LIFEBACK LAW FIRM
No matter where you are in Minnesota, if you have any questions about bankruptcy, visit www.lifebacklaw.com to speak with an attorney. You will be glad you did!
