Selling Personal Property and Bankruptcy
When someone is considering bankruptcy, they may worry they will lose their assets such as vehicles, homes, jewelry, etc. Many times, debtors sell some of their property to pay for their bankruptcy attorney or bankruptcy fees. There are a few guidelines and rules you should follow if you sell the property to a family member just before your bankruptcy case to avoid negative actions such as the dismissal of your bankruptcy case or being charged with bankruptcy fraud.
Selling Nonexempt Property
You can sell your nonexempt property during bankruptcy if you meet certain specific requirements:
- You needed the money for necessities such as housing, food, utilities
- You sold the property at fair market value
- You kept excellent records of the transaction
- You obtained trustee and court permission beforehand
If you have documented the reasons and can show that you needed the money for necessities, you can avoid any issues with the bankruptcy court. If you use the money for any other purpose, you should speak to a bankruptcy attorney before selling the property to ensure that you are legally able to do so.
Chapter 7 Bankruptcy
When you file Chapter 7 bankruptcy, you will submit paperwork declaring your exempt and nonexempt property. The bankruptcy trustee will evaluate your nonexempt property and determine if it could be sold to satisfy your debts to your creditors. Since the bankruptcy trustee will sell the property, there is no reason for you to sell it if you do not need it for necessities.
Avoiding Bankruptcy Fraud
If you try to hide any previous transactions in the past three to five years before your bankruptcy, you may risk penalties such as dismissing your case, paying restitution, or serving jail time for fraud.
Contacting a Citrus Heights bankruptcy attorney will help you navigate the complicated laws of your bankruptcy case.