Transfers And Fraudulent Activity In A Chapter 7 Can Really Hurt You.

Video Transcribed: Oklahoma Attorney Edward Kelley with 888-Debtline here answering your bankruptcy questions. We are in the series, things you need to know and consider when you’re deciding whether to file chapter seven. We’ve talked about what you need to qualify. We’ve talked about which things are not dischargeable. We’ve talked about which assets are exempt and which are not. Next thing we’re going to talk about is transfers and fraudulent activity in a chapter 7. So not a fun one but this does come up. You know I’m always straight with my clients. Just be sure that you ask and be honest with your attorney because there are some severe penalties if you are found to have defrauded the federal government in a bankruptcy including, but not limited to, losing your discharge and in some cases losing your exemptions. So it can be a big problem.

So transfers. So there are look back periods for different transfers but just basically in the last couple of years, if you have transferred anything into a relative or friend’s name or sold anything to a friend or relative for less than the absolute fair market value, you need to take that into consideration.

The trustee can actually go back and void a transfer or a sale for less than full market value. Pull back that property and take it. So just understand the easy one is, “Hey, I’m just going to put that in my son’s name or my mom’s name.” Big no no, unless that was done years before the bankruptcy and was done without any intention of filing bankruptcy. Now the other hand, if you sell something for fair market value and spend the money on something legitimate, that’s a different story. Again, shouldn’t be doing that in anticipation of bankruptcy. Of course, any debt that you incur in anticipation of bankruptcy, that creditor is going to have an argument against you.

So be aware of those things and any kind of fraudulent activity. So I have clients all the time want a wink wink, you know, yeah we’ve got this, but you know, it’s not titled. If you have an asset and you need to go over with your attorney, everything you have, you need to list it and you need to say what it is because, believe me, I as your attorney, I’m not going to defend you if I find out that you lied and of course it’s up to the attorney. I always make it real clear when someone gives me the wink wink, that we are not doing that and by and large, 90%, 99% of my clients are honest.

But those of you that are out there thinking, “Well, I just won’t mention this,” bear in mind the trustee has the full power of the federal government behind them as far as land records, titles, anything that’s of record they’re probably going to find and things that aren’t, some trustees are very adept at questioning and they may pull it out of you. They go over all your bank records so if you’re paying on something you’re trying not to list or if you’re trying to hide money or if you’re trying to transfer things, that very well may come out and then you’re going to be in a world of trouble.

So just understand as you’re considering whether to do chapter seven you should consider it only in the capacity that you’re going to be completely honest. You don’t want to risk anything else, and of course not good karma, not a good idea.

So that’s it for this. We’re going to wrap this series up. Next time with understanding reaffirmations and property collateral on loans. See you then.

As always, you can call me at 888-DEBTLINE, Edward Kelley or email me at edward@wirthlawoffice.com