why you need an attorney during a divorce

why you need an attorney during a divorce

Understanding The Problems With Asset Transfers Before Bankruptcy

by Diana Butler

You may believe that your actions before you file a chapter 7 bankruptcy won't affect you when you do file, but that may not be the case. There are several ways to get in trouble with the bankruptcy trustee if you aren't careful and one of the many is property transfers before you file. Read on to find out more so that you can avoid ruining your attempts to make a fresh start with bankruptcy.

Why are Property Holdings Important?

The bankruptcy codes allow the trustee to look back over some of your financial transactions in the time prior to your filing. As you might know, the trustee has the right to seize your property and use it to pay creditors unless it's protected by exemptions. It's not okay to get rid of property to keep it out of the trustee's hands and the time period for examining your transactions begins well before you file. For example, if you own a boat and fear it might be seized when you file for bankruptcy, you might sell it. You then pocket the cash and keep it to yourself. That might be considered fraud.

You Can Sell Property in Some Cases

You are allowed to sell property prior to a filing as long as you abide by the rules. If there was ever a time to consult with a bankruptcy attorney before you take an action, it is now. The following situations may allow you to sell your property before you file for bankruptcy but check with your attorney first.

  1. If you do sell or give way property, disclose it on your bankruptcy forms.
  2. No matter what you sell or the item's value, use the proceeds only for life necessities. That means showing a paper-trail that leads from the sale to the purchase of food, housing, transportation, clothing, medical needs, etc. Showing a need for the sale is vital when you are challenged about the sale.
  3. Make sure you get fair market value for the item you sell. Not doing so could prompt the trustee to reverse the sale and take back the property.

Selling or giving away property before you file for chapter 7 can be done, but it is risky and you must follow the rules. That being said, there is no need for you to do without the things you need when you have an asset that can be liquidated. Speak to bankruptcy attorney services to find out more about this tricky aspect of bankruptcy.


About Me

why you need an attorney during a divorce

My daughter and her former husband went through some very tough years. They tried everything to make their marriage work, but it just wasn't going to work out. When she came to me for advice about what to do, I sent her on to a divorce attorney. I explained to her how important it is to have a legal professional working with you from the very start of a divorce. If you are preparing to file for a divorce, or are currently going through one, go to my site. There, you will learn several reasons why you should have an attorney representing you through the process.