Transferring Property Before Bankruptcy

STOP! Don’t do it! A lot of our clients ask us whether or not they can simply transfer assets, such as cars, houses, etc. out of their names prior to filing bankruptcy as a way to keep those assets away from your creditors. No matter the value of the property or size of the transfer, it isn’t a good idea and you should consult with a Dallas bankruptcy attorney prior to making any mistakes.

Transfers of Assets Must Be Listed in Bankruptcy:

Even if you think you are doing something smart by transferring items prior to filing your bankruptcy, think again. When you sign your bankruptcy paperwork, you make an oath that everything listed is the truth. Various statements and schedules of the in your bankruptcy paperwork require you to disclose things such as assets, creditors, transfer of property, etc. So if you transfer assets prior to filing bankruptcy and fail to disclose the transfers or the existence of the assets, your case could be in jeopardy.

Transferring assets can cause major problems in your bankruptcy case. Whether you file chapter 13 bankruptcy or chapter 7 bankruptcy in Texas, many unwanted results can occur. For example, if you transfer a house to your son and fail to receive market value, your son could be facing a lawsuit from the chapter 7 bankruptcy trustee seeking the return of the house. The typical look back period for problematic transfers is 2 years, but just because you’re outside the bankruptcy look back period doesn’t mean you haven’t violated similar state law provisions. Lastly, transferring assets can even interfere with your ability to obtain a Dallas chapter 7 discharge if your intention was to defraud, hinder or delay your creditors.

About the Author

Derek Prosser understands that clients need help and need answers and that in order to properly address those concerns, clients need to deal with an attorney first and always, not just an assistant or paralegal. By effectively counseling from the outset of a case, Toronjo & Prosser Law can anticipate and address potential problems before they arise, as opposed to when they’ve already surfaced (the “Counsel Later” approach), and, in the end, strive for a seamless representation.