Words of Caution! What not to do before filing for Bankruptcy protection
by Matthew Grech | Apr 2, 2014 | Article |
Bankruptcy is an area of law that many people seem to have misconceptions about. And one of these misconceptions relates to the incorrect notion that upon filing for Bankruptcy protection, a person’s assets will automatically be taken from him/her. Thus, in an attempt to protect these assets, the person then transfers them to a friend or family member before filing Bankruptcy. In short, there is a way to protect one’s assets when filing Bankruptcy; however, transferring assets before filing Bankruptcy in an attempt to hide them is not the way to do it! In fact, the exact opposite is true. In other words, the way to protect one’s assets when filing Bankruptcy is to disclose them and then proceed to protect them by using authorized exemptions.
For example, if prior to filing a Chapter 7 Bankruptcy Petition, a person (the “Debtor”) transfers $5,000.00 to a friend in an attempt to “protect” this asset from her creditors, the Trustee can either i) move to avoid the transfer and get the property back and then distribute it to the Debtor’s creditors (best case scenario), or ii) move to have the Debtor’s discharge be denied if there was an intent to commit fraud (worst case scenario).
On the other hand, if the $5,000.00 was properly disclosed at the outset of the Bankruptcy case, then it is possible that it could have been exempted in its entirety and thus fully protected from the Debtor’s creditors. In other words, the Debtor would get to keep the $5,000.00.
To further explore what Bankruptcy can offer you, please call Grech Legal at 650-549-7728 for a free debt consultation.