Look, we all get it. When we get scared we hide. It’s a natural reaction to trouble to take the things we value and try to keep them safe. The same thing goes when people you owe money to come calling. You think about how you can keep those things you’ve worked hard for and value in your possession. Protecting Assets from creditors becomes a top priority.
One of the first reactions is to transfer ownership of your car or house or other items of value you have laying around the house. You may think about giving certain things away to friends or family. In the end, you’d rather someone you love have it instead of it going to some greedy creditor.
The only problem with protecting assets this way is that it’s illegal.
People who receive the fraudulent conveyance often get sued by someone, whether its a creditor or a trustee. These types of transfers have been illegal for at least the last 200 years. You simply can’t give away your wealth when you owe money to other people. The law is the same whether it’s at the state level or in the bankruptcy code. Gifts and/or fraudulent conveyances are not effective tools you can use to put your assets beyond the reach of creditors. If you are trying to fraudulently transfer assets, all you’re doing is setting the recipient up to be sued.
You can sell if the price is right.
What all this DOESN’T mean is you can’t sell your assets, it just means that you have to actually sell them for what they’re worth. For instance, if you have a 2 carat diamond ring, you can’t sell it to your friend Cindy for $50 and if you’re driving a Rolls Royce, you can’t sell it to your Aunt Jean for $1,000. You have to sell the items for what they’re worth, otherwise it raises serious suspicion. If you sell these items or you fraudulently convey property to someone else, the trustee is allowed to void that sale via a lawsuit. Generally speaking, the trustee has a period of time called a lookback. Generally that period of time is about 2 years. If you transfer items out of your name during that time period the trustee can sue the person who received your assets and get them back to use to satisfy your debts.
Another problem that can arise in transferring property in a fraudulent way is that you can run afoul of the bankruptcy code. In 11 U.S.C. 727 the bankruptcy court is allowed to DENY discharge if they find that you made a fraudulent conveyance. This means you just paid all this money and did all this work and you’re going to get NOTHING in return.
The best way to keep your assets is by filing a Chapter 13 Bankruptcy. You should always resist the urge to hide your assets. The United States Trustee has a great deal of power to look back through your finances through different types of hearings and examinations. You should ALWAYS consult a competent bankruptcy attorney to find out what your options are and what property is exempt from the trustee’s reach in your bankruptcy. If you have assets with a value that exceeds your exemptions, you should consider a Chapter 13 Bankruptcy.
The attorneys at Harmon and Gorove have decades of experience in protecting assets from creditors. We work hard to make sure that what YOU have stays YOURS. Contact our office today to set up a free, no obligation consultation to discuss your rights under the Bankruptcy Code.