The Short Answer
When you file bankruptcy, any property you've sold, given away, or transferred ownership of within the last two years must be disclosed on your Statement of Financial Affairs. This includes titled assets like cars, boats, ATVs, and real estate — even transfers to family members. The bankruptcy trustee reviews these transactions to make sure you didn't move property out of your name to shield it from creditors. We advise our clients to tell us about any transfers going back five years, because certain transfers can be reversed by the trustee.
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.
Key Takeaways
- The Statement of Financial Affairs in your bankruptcy petition requires you to list all property transfers made within the two years before filing.
- Transfers include any titled, tagged, or taxed asset — houses, cars, boats, ATVs, Jet Skis — whether sold, gifted, or signed over to someone else.
- Transfers to family members count just as much as sales to strangers, so putting a car in your child's name must be disclosed.
- The trustee will look at what you received in exchange for the transfer — selling a $100,000 asset for far below market value is a red flag that can result in the trustee reversing the transaction.
- Even if a transfer happened more than two years ago, it may still be relevant — we recommend telling your attorney about any transfer within the past five years.
- Failing to disclose a transfer is not just a bankruptcy problem; it can be treated as fraud, which carries serious legal consequences.
Attorney Insight
The mistake I see most often is a client who transferred a car title to a son or daughter a year before filing and didn't think to mention it — because in their mind, it wasn't really a "sale." But the trustee doesn't care about intent; they care about whether value left your estate without an equal return. In North Carolina, trustees routinely cross-reference DMV and property records against what's disclosed on the Statement of Financial Affairs, and discrepancies get flagged fast. A transfer the trustee decides was made for less than reasonably equivalent value can be unwound — meaning the property gets pulled back into your bankruptcy estate, sold, and the proceeds used to pay creditors.
