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Can I transfer or dispose of my possessions or property before I file bankruptcy?

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Yes, but only with proper bankruptcy planning and counseling. All transfers/gifts of property, refinances of property, and sales of property within 2-4 years of the bankruptcy filing must be disclosed on the bankruptcy schedules. Sales of businesses and shares of stock must be reported. Be ready for a bankruptcy trustee to carefully and thoroughly scrutinize the transactions. A debtor may have to appear several times under oath to explain what happened, may have to turn over financial records, such as receipts, bank statements, and check copies. David A. Arietta has the experience in this area, including dealing with the attorneys for the bankruptcy trustees. If any property was sold or transferred for less than fair value to someone before the bankruptcy filing, a Chapter 7 bankruptcy trustee may be able to reverse the transfer and recover the property or funds.  Different remedies apply in a Chapter 13 bankruptcy. In Chapter 13, the end result would be that the debtor would have to pay more into the Chapter 13 plan to make the ultimate distributions more equitable. Proper bankruptcy planning coupled with knowing your exemption rights can protect you and your estate going into bankruptcy.  The timing of the transfers and the bankruptcy filing is key. Bankruptcy laws prohibit debtors from disposing of assets before filing bankruptcy for less than fair market value. “Transfers of property” include selling assets or giving them away.  Refinances of property where you pull out money from the equity in the property are also considered transfers. Transfers made within one year of bankruptcy to or for the benefit of family members may be avoidable. Transfers made within 90 days of the petition date to or for the benefit of general creditors may also be avoidable.  In addition, state law fraudulent transfer lookback rules can be up to 4 years from the bankruptcy petition date. Businesses have to be mindful of these rules as payments to insiders (shareholders of the company) and payments to trade creditors made before the case is filed can be recovered by a bankruptcy trustee.   Consumers have to be mindful of these rules too as payments to family members and certain creditors made before the case is filed can also be recovered by a bankruptcy trustee.   There are certain defenses like contemporaneous exchange and new value. Specific analysis of each situation is required. A knowledgeable Bay Area bankruptcy attorney like David A. Arietta can advise clients how to protect their assets and how to deal with non-exempt assets. There are a variety of tools and options which can be applied to any given situation. Call us at (925) 472-8000 for an analysis of your situation.