Can I transfer ownership of my car before filing for bankruptcy? 34 Answers as of January 27, 2011

It is unwise to transfer any significant asset without reasonable consideration immediately prior to filing bankruptcy without first talking to an experienced bankruptcy attorney. The transfer may be considered fraudulent or preferential and can be reversed by the trustee. It may also be grounds for a denial of discharge, which is the worse that can happen to a debtor in bankruptcy.

Do not do this. Let me be very clear on this point, because there is a great deal of misinformation out there about such transfers. This is Bankruptcy fraud.a virtual textbook definition of it, in fact. Transferring any asset to a friend or relative in contemplation of Bankruptcy for less than true fair market value is fraud. The Trustee in you Bankruptcy case will find out about it and it can lead to all kinds of consequences you do not want. These could include having your debts declared forever non-dischargeable and/or criminal prosecution under federal the federal law as a felony offense. I don't know about you, but I have never seen any car worth that kind of risk.

In every instance I can imagine, you are far better off disclosing that you own the asset and exempting it from liquidation (to the extent that you can). There are some cases in which you may choose to "self liquidate" and sell the car for fair market value and use the proceeds to live off of if you have insufficient income to support yourself.then file for Bankruptcy when the money has been spent (known as a "spend down"). Keep in mind that doing so is less about the Bankruptcy and more about survival. A good test to consider whether the transaction is wrongful or not is to consider the anticipated result. If it involves a Chapter 7 Bankruptcy and ends in you getting the asset back at all or keeping it safe for a friend or relative, it is probably a fraudulent transfer.

In order to fully protect your assets, I urge you to disclose all of them to your Bankruptcy attorney prior to filing your case or in any way transferring them. Most reputable Bankruptcy attorneys like myself will offer a free consultation and can advise you on how best to protect everything you own.

Thank you for submitting your question to our firm, Mettias & Associates, in regard to your bankruptcy question. It appears that you wish to keep your car by selling it cheaply to a family member, then buying it back after bankruptcy. In some cases, depending on the facts of your case, the Bankruptcy Trustee will allow you to keep your car as a necessity of life. Please contact our office to schedule a free consultation to review your legal options in regard to your vehicle.

Please be advised this response does not create an attorney client relationship, and does not constitute legal advice. If you have a legal problem, you should meet with a local attorney in your area.

Any transfer to a relative within one year prior to filing a Petition must be disclosed on the Petition, and if you file a Chapter 7 Petition, is subject to being set aside by the bankruptcy trustee.

Selling a car for less than fair market value means you are giving away property that is going to be part of the bankruptcy estate upon filing. That means the trustee can take it from the person to whom you transferred it and sell it to pay your creditors. Most importantly, such a scheme could considered bankruptcy fraud which is a crime and can cause your bankruptcy case to be dismissed or you discharge denied. Any transfers to a relative within a year of filing for bankruptcy has to be disclosed in the Statement of Finacial Affairs. Failure to disclose it could also be considered perjury since you are signing the bankruptcy petition under penalty of perjury. You can keep a car that has a value of about $3,500 plus you have what is called the wildcard in the amount of $23,250 to exempt any additional value of the car and other property such as cash you have and bank accounts. If you do not have enough exemptions to protect all your property then you need to consider whether you should file a Chapter 7 bankruptcy case. If you have too much unexempt property you may have to file a Chapter 13 bankruptcy case and pay in a Chapter 13 Plan the value of property that you can not exempt so that you can keep it. Be careful with what you do since the consequences of not being truthful and accurate in your bankruptcy petition is punishable by fines and imprisonment plus you will not get your discharge if discovered doing something illegal or not in good faith. Make sure you discuss your case with an experienced bankruptcy attorney before doing anything. You cannot get out of a Chapter 7 case after filing without court permission and the trustee might oppose allowing you to dismiss your case if there is unexempt property that the trustee can take to pay your debts.

Meet with an attorney before doing anything.

There are exemptions available that might protect your car. You hire an attorney because they know the exemptions and how to use them. What you are proposing sounds wrong all over.

No, that would be fraud.

Absolutely not ok. What you are proposing is actually ab bankruptcy crime. There are ways to protect assets, but you need to sit with a lawyer and see what strategy will fit your needs. Transferring assets in contemplation of filing could result in a denial of your discharge and possibly criminal prosecution.

No, you may not do this. This would be a fraudulent transfer. There may be other legal ways to keep your car, however. Consult a bankruptcy attorney.

Any transfer of property for less than market value before filing bankruptcy is considered fraud. The FBI and IRS does prosecute bankruptcy fraud so do not do this. You could end up paying huge fines, losing your car AND going to prison. When you file bankruptcy, you are allowed a number of exemptions that allow most people to keep their property. Please consult with a bankruptcy attorney. You may be able to keep your car without running the risk of jail and fines.