Can I Transfer Property Before Filing Chapter 7 Bankruptcy?
Before I answer the question "Can I transfer property before filing Chapter 7?" let me start by stating that I am not an attorney and this blog does not contain legal advise. Bankruptcy law is complicated and any legal questions should be taken to an attorney who specializes in bankruptcy law. With this said, the simple answer to the question is "Yes."
Of course life is not simple so let me expound on this. Property can be transfered or sold prior to bankruptcy. The real question is when. There is a two year period immediately preceding the bankruptcy that trustees look at very carefully. Any property, real or personal, can be sold at the fair market value and you can even use that money to pay your attorney for filing bankruptcy. But property transfered during that two year period, that is less then fair market value, can cost you your bankruptcy.
Some people want to transfer or sell property in order to protect it from being taken or sold and then the money distributed to their creditors as part of the bankruptcy proceedings. Their intention is to get it back after the bankruptcy has been discharged. That behavior is fraudulent and can cost you to lose your bankruptcy discharge. An example would be: Selling a car to a friend for $50.00 then filing bankruptcy. Even if the title is transfered, the car was not sold at the fair market value. The court will interpret this as hiding an asset from your bankruptcy estate. If however the bluebook value on the car was $5000.00 and you sold it for $5000.00 then the transfer of the title was honorable.
A more common example is taking your name off a joint account like a deed. Lets say Grandma left her property to her five grandchildren and you are one of them. But you need to file bankruptcy and do not want to harm the the others who are titled on the deed as well. You can quick claim the deed over but you will need to list that transaction in your bankruptcy petition ( because the petition asks that question) and the trustee may not approve your bankruptcy unless the property is sold and your portion is returned to your bankruptcy estate.
The transfer of titled or real property is easy to track. The transfer of personal property is easier to hide or so you may think. A woman filed Chapter 7 bankruptcy. When the appraiser came through her home they saw a large free standing jewelry box. When they looked inside it was empty. The trustee wanted to know what happen to all of the jewelry. The woman stated it was costume jewelry and she gave it to her children. The trustee stopped the bankruptcy because they suspected she had, in that large jewelry box, jewelry that had value and she was attempting to defraud the court.
Many times, 
property that is transferred prior to filing bankruptcy can be kept and claimed as exempt. However, because people are not aware of the bankruptcy laws, they choose to transfer property and complicate their bankruptcy process. It is best to wait past the two year period after the transfer before filing. It is always a bad idea to commit perjury.
If you would like more information on bankruptcy see our other blogs on the subject. You are invited to visit our website at www.FLRMinistry.com or call us at 800-553-8621 Monday - Friday 9:00 - 5:30. Like us on Facebook and follow us on Twitter to get updates.