Can I transfer property to someone else before I file for bankruptcy?
Our California bankruptcy laws permit debtors to keep certain property necessary to maintain a modest standard of living. These laws, called bankruptcy exemptions, protect property from collectors so that the debtor has a reasonable chance at a fresh financial start after bankruptcy. However, while these protections afford the honest debtor a fresh start, some individuals try to get a head start by transferring property in an attempt to hide it from the bankruptcy process. As you can guess, concealing assets from the federal bankruptcy court in California is a horrible idea.
U.S. Bankruptcy Code Section 548 endows the bankruptcy court trustee with the power to undo a fraudulent transfer made within two years of the bankruptcy filing. Fraudulent transfers include any transfer made with the intent to hinder, delay, or defraud creditors; or transfers made while the debtor is insolvent which do not involve a fair value exchange. While the lookback period is set at two years by section 548, another section of the Bankruptcy Code (section 544) permits the trustee to apply state law to undo a fraudulent transfer. In many cases the state law lookback period is longer than two years.
There is generally no issue if you have sold property and received a fair price. However, if you have transferred property in a less than honest fashion, the transfer may be undone. For instance, if you sell your car worth $5,000 to your brother for $500, and then file bankruptcy two months later, the trustee may seize the car from your brother and sell it to pay your creditors. Likewise, deeding jointly owned real estate to a non-filing spouse prior to filing bankruptcy can create a thorny legal dilemma.
Every individual bankruptcy case must include a Statement of Financial Affairs which asks the debtor to list all property transferred within two years before the bankruptcy filing. It is important to answer this question honestly, and to discuss any recent property transfer with your California bankruptcy attorney.
If you are considering bankruptcy, call the Law Offices of Chirnese L. Liverpool at (818) 714-2200 to see if your property will have enough exemptions for you to be able to keep it. In many cases California bankruptcy debtors can legally protect property without the need to sell or transfer. Obtain your Free Consultation from a Los Angeles bankruptcy attorney and discover the best way to protect your property and restructure your financial obligations.
If you are in need of a North Carolina Bankruptcy attorney, contact the Maxwell Law Firm.