When preparing to file for bankruptcy with LifeBack, our team will walk you through the ins & outs of completing your petition. This includes detailed information about your financial history, including any property or money you have given away or transferred in the last few years. These transactions matter because of something called fraudulent transfers – which is a very daunting name for a very common occurrence in bankruptcy! Understanding what they are and why they must be disclosed can help protect your case and make sure that you receive the fresh start that a bankruptcy case can offer you.
A fraudulent transfer happens when someone gives away, sells, or transfers property for less than its fair market value. This can include things like selling or signing a car over for less than market value, gifting valuable items before filing, or even removing your name from an asset without proper reimbursement of equity. Even if the transfer wasn’t made with bad intentions, movements like these can be highly scrutinized. Whether or not there is the intent to hide it from creditors, it will be viewed by the courts as unfairly keeping assets out of the bankruptcy estate
For example, imagine someone owns a home with equity. Worried about losing the house if they file for bankruptcy, they sign the property over to a friend or family member, but continue living in it as if nothing changed. Even if the filer believes they are simply protecting their home, the bankruptcy trustee would view this as a fraudulent transfer because the homeowner gave away a valuable asset, in this case, the equity in their home, for far less than its real worth. In a situation like this, the trustee can undo the transfer, recover the home from whoever it was signed over to, and especially if the transfer wasn’t disclosed, potentially take action that puts the entire case at risk.
It is crucial to disclose any transfers like these because the bankruptcy trustee has the authority to review them and, in some cases, recover the property for the benefit of your creditors. Hiding a transfer or simply forgetting to mention one can cause serious problems. Being upfront about any gifts, sales, or transfers allows your attorney to address them with the proper plan of action that will and prevent misunderstandings down the road.
The good news is that most issues can be managed with full transparency and good legal counsel! More often than not, property can be protected with the powers of the bankruptcy itself. Our team is highly skilled in protecting your assets and interests while also complying with local rules and regulations.
CALL NOW FOR A FREE STRATEGY SESSION FROM AN MN BANKRUPTCY LAWYER AT LIFEBACK LAW FIRM
At LifeBack Law, we help clients identify and explain past transactions clearly so their case proceeds smoothly and their discharge remains protected. If you’re unsure whether something counts as a transfer, it’s always better to mention it and let your attorney determine how to handle it. When the time is right, or when you are ready, reach out to Minnesota’s MOST Kind and Helpful bankruptcy law firm by going now to www.lifebacklaw.com. You will be so happy you did.
