If you are considering filing for bankruptcy it is likely you are in a difficult financial situation. When this occurs, you may contemplate selling assets that have higher value so you can use the money to support yourself.
In a Chapter 7 bankruptcy, non-exempt assets of value are taken by the bankruptcy trustee and sold—the money made from this sale is then distributed to your creditors. As a result, you need to be careful selling, transferring, or giving away your assets before filing for bankruptcy.
Selling Your Property
Selling your property right before filing for bankruptcy can be fine if done for the right reasons. Many times, if you are strapped for cash, selling an item of value can get you the money you need quickly. If you need money to buy necessities such as food or clothing, or pay rent or your utility bills, then you can sell your property to meet these needs. For example, if selling your piano will get you enough money to provide food for your family, you can sell it. However, it is important that you sell it for what it’s worth and that you use the money only for things you need.
Transferring or Giving Away Property
If you are planning to file for bankruptcy, you need to be very careful about transferring property of value. Transferring or giving away your property for free or at a super low price can be considered fraud if you file for bankruptcy right after. This is because in a chapter 7 bankruptcy the bankruptcy trustee sells your items of value to get funds to pay back your creditors. This means you will be required to give up your property.
You can’t avoid this by trying to transfer your property into someone else’s name or by “giving” the property to that person to hold for you while you file for bankruptcy. For example, you can’t “give” or transfer property like a 4-wheeler to a family member, so it isn’t included in your bankruptcy and taken by your trustee to be sold. Doing this can be considered fraud, so don’t do it!
When it comes to selling or transferring property before bankruptcy, you will need to be prepared to disclose it. The court will look at when you sold or transferred the property, if you got a fair value for it, and how you used the money you received to determine if it was valid.
Talk to an Experienced Bankruptcy Attorney
Deciding to file for a Chapter 7 bankruptcy can come at a time when you are facing serious financial difficulties. If you are worried about how selling or transferring your property could affect your ability to file a successful bankruptcy, talk to a skilled Georgia Bankruptcy attorney at The Ballard Law group. Our attorneys have years of experience handling bankruptcy cases and can answer your questions on what is appropriate and what is not when it comes to selling or transferring your property before bankruptcy. We can assist you in your bankruptcy so you can move toward a better financial future. Call (404) 800-9939 to schedule your free consultation today!