What Is Considered A Transfer For Bankruptcy Purposes?
If you are filing bankruptcy then a portion of your bankruptcy petition called the Statement of Financial Affairs asks if you have made any transfers.
Section 10 of the Statement of Financial Affairs requires you to, “list all other property, other than property transferred in the ordinary course of the business or financial affairs of the debtor, transferred either absolutely or as security within 2 years immediately preceding the commencement of this case. (Married debtors filing under Chapter 12 or Chapter 13 bankruptcy must include transfers by either or both spouses whether or not a joint petition is filed, unless the spouses are separated and a joint petition is not filed.)”
So what exactly does that mean? It means if you have sold a major tangible asset such as a house, car, Jet Ski, boat, ATV, basically anything that is titled, tagged or taxed, needs to be listed in this area. Also, if you have transferred ownership, this information will be included in this area as well. So for example, you buy a car for your 16 year old, and after they graduated, you transferred the title to their name, then that transaction would need to be included in this area as well. Any property sold or transferred within the last 2 years must be listed in your bankruptcy. We encourage our clients to tell us about any property that has been transferred in the last five years.
Beware though; the bankruptcy Trustee will want to see what you received for this transaction. Did you sell a house that was worth a million dollars, owned free and clear, for $5 bucks? This is his way of catching Debtor’s trying to “beat” the system. In such a case, the Trustee would reverse the transfer, sell the property and use that money to pay off your debts. Anything remaining would go to him. If you have sold or transferred a property within the past 5 years it is critical to discuss that transfer with your attorney so he or she may advise you correctly.
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