If you are considering bankruptcy or you have any concerns at all about your financial situation, it’s important to be aware of the legal and illegal things you are permitted to do. Far too many people look for an easy way out, and in some cases, their actions break the law. Even if they do not intend to do anything wrong and they are otherwise law-abiding citizens, their financial desperation puts them in a spot where they are willing to do just about anything – even illegal things – to solve their problems.
One of the most common legal issues for people considering bankruptcy is illegal asset transfers. This occurs when a person about to file for bankruptcy moves assets into another person’s name to protect them from the bankruptcy.
Now, it’s natural to want to protect what is yours. If you have rightfully earned money or made investments, and you’d prefer not to be forced to use that money to pay off your mounting debt, it’s understandable why you might want to move ownership of that money or those assets to a loved one or friend.
The problem is asset transfer can be illegal.
What Types of Asset Transfers are Illegal?
There are three types of illegal asset transfers. If you are struggling financially and you believe bankruptcy could be in your financial future, even if you don’t plan to file for several months or more, you need to avoid the following:
Transferring Property into Someone Else’s Name
Transferring property, including your home, into a friend or family member’s name might seem smart if you are about to file for bankruptcy, but it is actually illegal. It’s possible for your bankruptcy trustee to reclaim any property transferred within a year of your filing and use the property to repay debts, or your bankruptcy request can be denied outright.
The truth is, it might be possible to protect your property in your bankruptcy filing without doing anything illegal, which is why it is so important to work with an experienced attorney who knows how to look out for your best interests.
Selling Off Assets for Less than Market Value
It might also be tempting to sell assets for less than their market value – after all, something is better than nothing if you are going to lose everything in bankruptcy, right? Unfortunately, this can also be viewed as an illegal transfer, especially if you are selling non-exempt property.
Where things get dicey is if you try to sell assets to pay bills, not intending to file for bankruptcy, only to realize bankruptcy is necessary a few weeks or months down the road. If you decide to file for bankruptcy and you have recently sold any assets, be sure to disclose this information to your bankruptcy attorney. He or she can help you determine the best way to handle your actions now that you are filing.
Repaying Family Loans
Loans from family are prioritized differently than loans from professional lenders. This means if you pay back money you borrowed from a family member within 90 days of filing for bankruptcy, the trustee can disallow this payment. Your trustee will take action to prevent other creditors from being left at a disadvantage, which means anything you paid a loved one could be demanded from the trustee to be put toward other debts.
The ins and outs of bankruptcy can be confusing and the last thing you want if you are filing is to have your request denied because of an honest mistake. An experienced attorney can help you manage your circumstances and move forward in the best way possible. For more information or to schedule a consultation, contact the experienced Tampa bankruptcy attorneys at The Law Offices of Robert M. Geller at 813-254-5696.