Don't Transfer Assets Prior to Filing Bankruptcy

TL;DR

Don't transfer assets before filing for bankruptcy as it can cause legal complications and may not protect your assets as intended.

Transcript

everybody John Skiba from the Arizona consumer law group and I'm the founder of the consumer warrior project my goal with this video series is really educate you on some of the issues that pop up when you're doing things like bankruptcy or you're being sued by debt collectors and all the other kind of miserable things when it comes to debt collecti... Read More

Key Insights

• 📼 Transferring assets prior to filing for bankruptcy can cause significant problems and be considered fraudulent by the court.
• 😇 Innocent transfers, like giving assets to family members, can also lead to complications in the bankruptcy case.
• 📼 Selling assets for their approximate value to non-insiders is generally acceptable and can protect the assets in the bankruptcy process.
• 🥡 Consulting with a bankruptcy attorney before taking any actions related to asset transfers is crucial.
• 👮 Arizona has exemption laws that can help protect certain assets in bankruptcy cases.
• 👨‍🎨 The goal should be to navigate the bankruptcy process with minimal pain and loss of assets.
• 📼 The court distinguishes between simple transfers and legitimate sales when evaluating asset transfers prior to bankruptcy.

Questions & Answers

Q: Why do people transfer assets prior to filing for bankruptcy?

People transfer assets to protect their belongings from being seized in bankruptcy and to avoid losing everything.

Q: Are innocent transfers, like giving a car to a child, also considered fraudulent?

Yes, innocent transfers can still be considered fraudulent if they occur within the two-year period before filing for bankruptcy.

Q: Can selling assets instead of transferring them solve the problem?

Selling assets for their approximate value to a non-insider is generally acceptable and does not create issues in the bankruptcy case.

Q: Can the court undo asset transfers made to family members or close friends?

Yes, the court can undo asset transfers and may sue the person who received the transferred asset, which can strain relationships.

Summary & Key Takeaways

• Transferring assets before filing for bankruptcy is a common instinct to protect belongings, but it can lead to significant problems in the bankruptcy case.

• The Bankruptcy Code has statutes in place that consider transferring assets without receiving equivalent value within a two-year period as fraudulent.

• Innocent transfers, such as giving a car to a child, can also be considered fraudulent and cause difficulties in the bankruptcy case.