September 25, 2015

Chapter 7 bankruptcy is referred to as a liquidation, where the non-exempt assets of the individual are sold and the proceeds used to pay off debts.  Often people will remove their name from a deed or title in anticipation of bankruptcy, or transfer their real or personal property to a friend or family member to try to prevent creditors from seizing the property. This can be a big problem in a bankruptcy.
When you remove your name from a deed or title, the person remaining on the deed or title has effectively received a transfer of your ownership interest in the property. The Trustee has the ability to look back up to two years for these types of transfers.  Such a transfer may be considered a fraudulent transfer under the Bankruptcy Code, and the Trustee may demand repayment to the bankruptcy estate for the value of the transferred interest, and can actually demand the payment from the friend or family member who was on the deed or title and received your portion.
 
This is why it is important to discuss all property you have owned with a knowledgeable bankruptcy attorney.  We recommend that you meet with an attorney as soon as you believe you are in financial trouble, and definitely discuss any asset-protection strategies before making any changes to your ownership interests in real-estate, automobiles, business interests, or other items of value.
 
Michael A. Spencer
Associate Attorney
 
 

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