Don’t Try to Outsmart the System
Asset transfers can pose a problem if not handled with knowledge and guidance from your bankruptcy attorney. As the saying goes, “This is not their first time at the dance”. Bankruptcy courts do cases all day long. They have seen it all. You are not going to be able to outsmart them, so please don’t even try. Because the consequences are serious. It is absolutely necessary to be truthful and accurate in the filing of documents. When listing assets and debts, you are signing, under oath, that the statements are true. If they are not you are committing perjury, a crime, punishable by fine or jail time. This is also true for the answers you give at the 341 meeting.
It is imperative, to begin with accurately listing all your assets and debts. Remember, debts that are not listed are not discharged and unlisted assets or potential assets can cause your bankruptcy to be reopened even years after it is closed.
1. Fraudulent Asset Transfers
Fraudulent property transfers are where you transfer or conceal property with the intent to deceive the court.
Transferring property before bankruptcy can lead to big trouble. Transfers include giving away, selling, and concealing assets. You need to discuss any transfers with your attorney before you file for bankruptcy. There are numerous filing and technical details that can run afoul of the bankruptcy court. They are covered in section 544, 547, and 549 of the bankruptcy codes.
The key point here is that the bankruptcy trustee has the power to overturn, void and reverse many property transfers. Worst still, fraudulent transfers can lead to denial of your bankruptcy petition and even jail. If the court denies your bankruptcy, none of your debts are dismissed, all your nonexempt assets are surrendered, and the bankruptcy is on your record.
2. Constructively Fraudulent Asset Transfers
Constructively fraudulent property transfers are those that are not necessarily intentionally fraudulent but can be so close as to still be cheating. The typical example is giving away assets to friends and family.
3. Preferential Asset Transfers
Creditors have the right to receive as much is legally possible. So, when you pay a favored creditor, the others will receive less. That is unfair and the trustee has a right to get those assets back for the benefit of all creditors. General those are transfers done with 90 days of the bankruptcy filing. The time limit may be extended to one year if made to “insiders” like family.
Payments that are not considered preferential are:
- Small payments of less than $600 to a single creditor.
- Payments on secured debts, like payments for car and mortgage that are just to continue to keep them current.
- Payments for current expenses, like rent, utilities, and food.
- Payments for back or current alimony or child support.
In conclusion please call our office at (775) 786-7600 or (775) 690-9120 and set up an appointment for a free and confidential consultation with me to discuss your financial situation. We will investigate all of your options and alternatives, even those that don’t require you to file bankruptcy at all. Feel free to visit our website at www.harrislawreno.com to learn more about our bankruptcy practice here in Reno.