When some people deal with financial uncertainty and the prospect of bankruptcy, they believe they should give away as much property as possible. After all, if it is just going to be sold to pay off credit cards, it is better to give it away to family and friends, right? Not so fast.
Bankruptcy filings look at past transfers
When you file for Chapter 7 Bankruptcy, the bankruptcy trustee looks at all property transfers for the past 2 years, and for some property types, even longer. And, with your initial filing, you have to report all property transfers in the prior 2 years. If that trustee finds that any of these transfers were fraudulent, those transfers can be rolled back to pay creditors named in the Indianapolis, Indiana, bankruptcy proceeding.
Any transfer of your legal rights to an asset can qualify as a transfer. This can make a difference. For example, if you let a family member borrow a vehicle for an indefinite period of time, that is not a transfer. But, if you transfer the title to them, it is a transfer.
What does not count?
Normal and reasonable gifts do not qualify as transfers, as long as they are given at customary times, like birthdays, special occasions, holidays, etc. Reasonable donations to Indianapolis, Indiana, charities also do not qualify. Tithing also does not qualify, if it is less that 15% of the bankruptcy applicant’s gross income.
It is complicated, but worth it
As our Indianapolis, Indiana, readers can see, bankruptcy can be complicated. However, it is worth it because it can give you a fresh financial start.