Selling Assets Before Bankruptcy: Keep It On The Up and Up
Many individuals wonder about selling assets before bankruptcy, if it’s OK to do so.
Bankruptcy attorney Jen Koss discusses selling and transferring property before filing for bankruptcy.
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A lot of people wonder whether they can sell assets before bankruptcy. The answer to that question depends on the circumstances surrounding the sale or transfer.
What Happens: Selling Assets Before Bankruptcy
A bankruptcy trustee will want to know what you received in proceed sales, what property was transferred, who it was sold or given to, how you spent those proceeds, and whether the buyer was a friend or family member.
The type of property that sold or transferred is important to consider. This is because if the property is one that is ordinarily protected in a bankruptcy, there really isn’t any bad faith reason why you would transfer or sell that property.
Suspicious Transfers of Property
It’s important that you receive close to fair market value for your property when you sell or transfer it. If not, it will be evident to the trustee that you might be trying to hide or get rid of assets.
This is especially true if the trustee sees that you transferred or sold property to a friend or family member for less than fair market value. The trustee will also want to know how you spent your proceeds for a few reasons.
One of those reasons is to ensure that you did not give those proceeds to a friend or family member to whom you owe money.