The desire to protect your assets may be a major reason why you’re looking into bankruptcy, but there are a few types of transfer that are illegal to perform right before filing. Here are some examples:
Transferring property into someone else’s name, such as a friend or family member. If you attempt to protect your assets by transferring them to someone else within a year before the bankruptcy filing, the bankruptcy court may be able to reclaim the property and even deny the bankruptcy discharge.
Selling your assets for less than market value, especially if the items are not exempt from the bankruptcy. For example, selling your used vehicle for a reduced price shortly before filing for bankruptcy could be considered an illegal transfer.
Paying off family loans. Payments of loans to family members within 90 days before filing for bankruptcy may be confiscated and returned to the testate. The reasoning behind this policy is that paying back family loans leaves other creditors at a disadvantage.
Here we’ve listed three types of illegal asset transfers, but others exist as well. If you have any questions about what you can and can’t transfer before your bankruptcy filing, contact the legal team at Hathaway Law today.