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Transfers of property before a bankruptcy

One of the most commonly asked questions is: Why can’t I just transfer the title to my car (or other significantly valued property) to a relative (or other person) before I file for bankruptcy so that I will not risk losing it to creditors in my bankruptcy case?
A transfer of ownership/title for this reason, done at a time when you are insolvent ( which most people considering bankruptcy are) is generally considered a "fraudulent transfer" and will result in one or more undesirable consequences.
If the transfer is not disclosed in your bankruptcy petition, the matter may be referred to the United States Justice Department for criminal prosecution. A conviction for Bankruptcy Fraud can and often does result in a prison sentence. Another consequence of a fraudulent transfer is the likely request of the Bankruptcy Trustee to have the court deny the debtor any discharge of debts in the bankruptcy case. Upon proof of a fraudulent transfer, most courts will grant this request. A third common result of a fraudulent transfer is for the court to order that the person who received the property turn it over to the Trustee for liquidation (ie., to be auctioned with the proceeds going to creditors).
The bottom line is: DON'T DO IT! Its not worth it. In most cases, debtors do not lose any property. There are, however, cases in which not all of a debtor’s property can be protected. If the value of the property that may be lost in the bankruptcy is far less than the debt being erased, the benefit of filing and receiving a release from crushing debts will be well worth the deal.

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Robert J. Warren, P.A., Attorney at Law - Gainesville Bankruptcy Attorney
Located at 703 N. Main St., Suite C, Gainesville, FL 32601.
Phone: (352) 377-6600.
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