Archive for the ‘Exemptions and Bankruptcy’ Category

Can I Transfer My Property To Friends or Family to Keep From Losing It in a Bankruptcy

Saturday, December 19th, 2009

Generally a debtor cannot transfer property to others to keep from losing it in bankruptcy…unless the debtor has transferred the property for fair value or in exchange for other property of the same value or, in Pennsylvania, the debtor has transferred the property more than 4 years prior to a bankruptcy filing.

The Bankruptcy Code allows a bankruptcy trustee to “avoid” any transfer of property by a debtor if: (a) the debtor intended to hinder, delay or defraud creditors, or (b) the debtor receives less than a reasonably equivalent value (in money or other property) in exchange for the property, (c) the debtor was insolvent at the time of the transfer or was made so as a result of the transfer, and (d) the transfer occurred within 2 years of the date of the bankruptcy filing. Pennsylvania law extends the “lookback” period to 4 years.

“Avoid” means that the trustee can retrieve or repossess the transferred property or obtain a judgment (against the debtor or the person who receives the property) in an amount equal to the value of the transferred property as of the date of the transfer.

What is worse is that once the trustee retrieves the transferred property, the debtor will not be entitled to exempt any portion of the property because, technically, the debtor is not the owner of the property on the date of his or her bankruptcy filing (a prerequisite under the Bankruptcy Code to being allowed to take an exemption).

Nevertheless, there are several legal, ethical and court-approved ways to transfer property to keep from losing property in a bankruptcy case.

If you wish to discuss the content of this post, please feel free call me at (570) 823-9400 or write to me at davidharrisesq@epix.net.

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Will You Lose Property If You File A Bankruptcy Case

Saturday, October 3rd, 2009

More often than not, No!

A chapter 7 bankruptcy case is a liquidation or “straight bankruptcy” case, meaning that the debtor’s assets are liquidated and the proceeds are used to pay creditors’ claims.  In exchange for surrendering property to  satisfy claims, debtors are granted a discharge of liability on most prepetition (i.e., pre-bankruptcy) debts.  However, not all of an individual debtor’s assets are liquidated to pay claims;  rather, some assets are “exempt” and do not become property of the debtor’s bankruptcy case. In other words, exempt assets are not part of the pie which is liquidated and then distributed. A debtor’s claim of exemptions is at the heart of a bankruptcy case.

Permitting individual chapter 7 debtors to claim certain property as exempt serves the “fresh start” policy upon which the Bankruptcy Code is based. The items which a debtor can claim as exempt are items which are vital to a debtor’s ability to get on with his or her life after being granted a discharge. It is essential to the fresh start policy that, at an early stage in their bankruptcy cases, debtors have a clear picture regarding whether the assets they have claimed as exempt are, in fact, exempt.

Please call me to discuss your situation at (570) 823-9400 or send an e-mail to me at davidharrisesq@epix.net. You may also write to me at 69 Public Square, Suite 700, Wilkes-Barre, PA 18701.

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