During the process of bankruptcy, everyone wants to protect their assets – losing property is not something that anyone wants to go through. However, creditors are going to be looking at your assets and there are certain transfers that are considered fraudulent when conducted prior to filing for bankruptcy. Our bankruptcy attorney in Philadelphia explores 3 of these below.
Selling your assets for much less than their market value may be considered a fraudulent asset transfer. Why? This could be seen as a way to transfer your assets to somebody for a cheap price in order to reclaim them later. For example, selling your TV for 50% of its market value can be considered fraud depending on when the transfer takes place and whether the TV is considered exempt from the bankruptcy process.
What is market value? Fair market value is often defined as the price a typical buyer would pay a typical seller in an arms length transaction free of any undue circumstances or conditions given the condition of the item. In other words, it’s not the exact price that your property is worth, but what you can reasonably presume to receive by selling it.
Transferring property into the name of someone else prior to bankruptcy filing can be considered fraud. It is understandable that someone would do this – you don’t want to lose an asset to the bankruptcy process so you transfer it into the name of a family member or friend. However, doing so can be considered a fraud and if you do this in the year before filing (and some circumstances as many as four years) for bankruptcy the property may be claimed by the bankruptcy trustee.
Paying Family Loans
Paying off family loans within one year prior to filing for bankruptcy can be considered fraudulent due to the fact that it leaves creditors at a disadvantage. Also, the bankruptcy trustee may reclaim any payments that are made during the 90-day time period leading up to the filing. The trustee may require that the creditor or family member return the money to the estate.
With a broad range of experience in the field of bankruptcy law, William D. Schroder, Jr. has the experience needed to evaluate fraudulent transfer situations and provide sound advice. Experienced professionals can guide you through this time period and help ensure that everything goes as smoothly as possible.
If you are considering filing for bankruptcy and want to transfer or sell assets prior to doing so, make sure to consult a bankruptcy attorney in Philadelphia like William D. Schroeder, Jr. beforehand. Even if you don’t realize it, you may be making a fraudulent asset transfer and this will only hurt you during the bankruptcy process. For more information or further questions, give us a call at 215-822-2728.