FAQ’s – Bankruptcy

FAQ: Bankruptcy

Bankruptcy FAQ

The team at Jupiter Legal Advocates has put together this bankruptcy faq list that may help answer questions you have about bankruptcy issues you may be facing or considering.

If you don’t see your question answered here – please email us at info@jla.legal so we can help you.


Bankruptcy FAQ List:

Do I Need a Lawyer?

Although it’s technically true that you can represent yourself in almost any legal proceeding, the real question is, do you know what you’re doing?

Bankruptcy cases are no different – they can be fairly complicated regarding fulfilling certain requirements or deadlines. Failing to properly file your case can have bad consequences, such as causing it to be prematurely dismissed.

You can save yourself the wasted time and effort by hiring an experienced bankruptcy lawyer who will expertly guide you through the process.

I have a question about bankruptcy and asset transfers.

I am considering filing for a Chapter 7 Bankruptcy.  I have some personal items I want to keep, and one is a car which is paid for and worth about $7,000.00.  May I give the car to my 21-year-old daughter as a gift and have her let me drive the car and then file bankruptcy?

 

Answer:

Constructive Fraudulent Transfer

Whether you realize it or not, under bankruptcy laws you may have “fraudulently” transferred an asset.  This could happen if you sell an asset for less than its “reasonably equivalent value” and you do so within a certain period prior to filing for bankruptcy.

In other words, you sell the asset for less than its actual market value or if you give it away.  The look back period in bankruptcy law is 2 years; however, the look back period under the Uniform Fraudulent Transfer Act (UFTA) is 4 years, if it applies.

These are examples of constructive fraudulent transfers:

  • Selling your car to someone for $5,000 when its actual market value is $8,500.
  • Giving your daughter one of your vehicles and putting it in her name.
  • Transferring the Deed to your house to an adult child to avoid probate.  If this is done and bankruptcy is filed, it can be devastating to the debtors as they will not be able to exempt the home if there is any equity in it, as they would if it were still in their names and was their homestead.  This can be remedied by transferring the Deed back into their name prior to filing for bankruptcy.

In the examples above in this bankruptcy faq answer, the asset transferred can be recovered by the bankruptcy trustee and considered a part of the bankruptcy estate to be used for the benefit of the creditors of the debtor to the amount that its value exceeds the allowed exemptions.

Either the amount of equity in it will have to be paid to the trustee or the house or other asset will have to be sold to pay the equity to the trustee for the benefit of the creditors.

Intentional Fraudulent Transfers

An intentional fraudulent transfer occurs when a debtor knowingly transfers property with the intent to defraud, hinder, or delay his or her creditors. In other words, the debtor deliberately transfers an asset to another’s name so that creditors or the bankruptcy trustee cannot recover it.  Usually there is intent by the debtors to recover the asset when the creditor or bankruptcy trustee can no longer recover it.

Bankruptcy Fraud

Bankruptcy fraud is a crime.

If there is intentional fraud then you may be prosecuted for criminal acts typically including concealment of assets, intentional fraudulent transfers or concealment or destruction of documents or fraudulent claims.

Another important point to make in this bankruptcy faq answer is that false statements on your bankruptcy petition can constitute perjury. Whether you will be prosecuted depends on the egregiousness of the action

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