When filing for bankruptcy you will have to disclose any transfers of assets you may have had in the last 2 years prior to filing. Assets include cash assets as well as other assets: vehicles, real estate, furniture, or retirement accounts. And you may be asked about assets transferred in the last six years, if the transfer involved a friend or family member.
Disclosing Transfers in Minnesota
When disclosing transfers, you have to consider any and all assets that were transferred. Some common transfers include: vehicle transfers, and cash transfers between bank accounts.
When Another Person Makes a Deposit in Your Account
A common issue for clients is allowing another person to make deposits into their bank account and then transferring those funds to another account (not owned by the client). For example: client allows his sister to deposit her tax refund into his account and then upon receiving the funds, client transfers the funds to the sister’s bank account.
The argument is, those were his sister’s funds, and the source of those funds are from the sister’s tax refund. But here is the issue: once the client’s sister transferred those funds into the client’s account the funds became his funds and his funds alone. And when he transferred those funds out of his account into his sister’s account that was a transfer. And transfers need to be disclosed in a bankruptcy.
What Us the Likelihood That the Transfer Is Avoidable?
Once you have identified a transfer and disclosed the transfer on the bankruptcy petition, next you would want to determine the likelihood that the transfer is avoidable. The bankruptcy trustee has the power to avoid some transfers-this means the trustee can request the funds back from the recipient of the transfer or settle with the client. In this transfer example: the debtor made the transfer within 2 years before the date of the filing of the petition; he received less than reasonably equivalent value in exchange for such transfer; and he made the transfer to or for the benefit of an insider (his sister).
Even though, the funds are traceable to the sister’s tax refund, once the funds went into the client’s bank account, the funds became the client’s asset and thus a transfer when it was moved out of his bank account. Transfers are not always evident and there may be consequences to different transfers that can impact your bankruptcy.
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Don’t be caught unaware when it comes to transfers. Contact the attorneys at LifeBack Law and see us at www.LifeBackLaw.com
