In your research on consumer bankruptcy, you may discover that your Chapter 7 bankruptcy trustee sells your nonexempt property on your behalf and uses the funds to pay off your unsecured creditors. Or, your Chapter 13 bankruptcy trustee may expect you to pay off the amount equal to the value of your nonexempt property to your unsecured creditors. Either way, you may consider beating them to the punch, so to speak, and taking it upon yourself to give away these assets for proceeds. Well, for this, please read on to learn whether you can sell assets ahead of bankruptcy and how a seasoned Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq. can help you make the right moves.
Can I sell my assets before I file for bankruptcy?
It is only okay under specific circumstances to sell your assets before filing for bankruptcy. For one, you must ensure you sell them to receive a reasonably equivalent value in return. This is because, ahead of a Chapter 7 bankruptcy, you may give your unsecured creditors the same or similar amount they would have received through your trustee’s sale. And, before a Chapter 13 bankruptcy, you may pay your creditors an equivalent amount anyway.
Secondly, you must avoid selling your assets to relatives or close friends. This may be labeled as a preferential transfer. Here, it may be argued that you attempted to hide your assets from creditors in your upcoming bankruptcy proceedings; and then, that you anticipated getting these assets back at your case’s close. In short, you must sell your assets for an amount and in a manner that is not perceived as fraudulent activity and that does not negatively impact your unsecured creditors. Otherwise, you may be accused of fraud, which opens up a whole other set of legal consequences for you.
When might the court find an issue with the sale of my assets?
Besides the amount you received for your sold assets and who you sold them to, the New York State Bankruptcy Court may look into the following factors to determine whether the sale of your assets was fraudulent or otherwise unethical:
- Whether or not the sold assets are categorized as exempt or nonexempt.
- Whether or not the assets were sold less than a year before you filed for consumer bankruptcy.
- Whether or not you purposefully intended to conceal the sale of your assets from your bankruptcy paperwork.
- Whether you used the proceeds from these sold assets to pay for necessities or buy new exempt property or luxury items.
To conclude, you must be fully equipped to enter your upcoming bankruptcy proceedings. Your preparation is incomplete without hiring a competent Rockland County bankruptcy attorney. Contact The Law Offices of Allen A. Kolber, Esq. today.
