What happens if I transfer my car title 16 months prior to my bankruptcy filing? How? 8 Answers as of August 21, 2015

I live in a state where you are exempt $5,000 of equity on your vehicle. I filed Chapter 7 this month. The month I lost my job I sold the vehicle to a friend in order to live off the money, it was sold for $4,500. I've been unemployed since that month total of 16 months and I have no other assets. Why do I have to list this transfer of title? Do I have to pay the money to the Trustee? I don't have any money and had to borrow money to pay for my Chapter 7 bankruptcy.

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A Fresh Start
A Fresh Start | Dorothy G Bunce
The reason you have to list this transfer is because the bankruptcy code says so. Whether you or your friend have to pay this money to the trustee will depend on whether this sale was made under terms that would be considered fair. For example, that the car was worth only the $4,500 you received for it, and not $15,000. A big part of bankruptcy is being willing to comply with the law, because even for something of low importance, violating the bankruptcy law can turn you into a criminal.
Answer Applies to: Nevada
Replied: 8/21/2015
Goldsmith & Guymon
Goldsmith & Guymon | Marjorie Guymon
You should disclose the sale but since you received close to fair market value the transfer should not be an issue. It is only where you transfer away an asset for little to no consideration that the transfer could be undone.
Answer Applies to: Nevada
Replied: 8/21/2015
Eranthe Law Firm
Eranthe Law Firm | Cate Eranthe
The bargain you make when you file for bankruptcy is full disclosure of ALL your finances in exchange for the discharge of your dischargeable debts. If you sold the car for its fair market value or close to it, then you should be fine. The trustee needs to make sure it wasn't a fraudulent transfer. (For example, given to friend for little money and expecting to get the asset back later after the bankruptcy case.) If it was above board and you fully disclose the transaction there should be no problem. Bankruptcy is not a DIY project. There are many rules and procedures to follow. Trustees can ask questions about any transactions and have the right to fully investigate your finances.
Answer Applies to: California
Replied: 8/21/2015
The Law Office of Darren Aronow, PC
The Law Office of Darren Aronow, PC | Darren Aronow
#10 of the statement of financial affairs requires to disclose all transfers within 2 years. Probably wont be an issue for your case.
Answer Applies to: New York
Replied: 8/21/2015
Ronald K. Nims LLC | Ronald K. Nims
If $4,500 was the reasonable value of the car? If it was then there is no problem. If the car was worth more, then your friend may have to give the difference to the trustee.
Answer Applies to: Ohio
Replied: 8/21/2015
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    You are required to list that transfer. The trustee is looking for abusive transfers. I would not worry about this unless the car you sold for 4500 was worth one heck of a lot more.
    Answer Applies to: California
    Replied: 8/21/2015
    Garner Law Office
    Garner Law Office | Daniel Garner
    The law allows the bankruptcy trustee to scrutinize any transfers, especially to relatives or friends, to determine if you obtained appropriate value for them or if it was part of a scheme to hide assets. So if you obtained reasonable value for the car you sold to your friend, it should not be a problem. If it was significantly less than market value, however, the trustee has the legal power to demand that your friend pay more to get it up to the equivalent of an arms-length transaction. If the trustee wants to recover the lost value in the transfer, s/he will first give you an opportunity to pay it rather than going after your friend. The whole purpose of this rule is to prevent sham transactions that would improperly shelter assets from your creditors. If your deal was fair then there is nothing to fear in reporting it.
    Answer Applies to: Oregon
    Replied: 8/20/2015
    Mauritz Van Niekerk, Attorneys at Law
    Mauritz Van Niekerk, Attorneys at Law | Christiaan van Niekerk
    You should be fine as long as the car was sold for market value and use the money to live on this should not be a problem.
    Answer Applies to: New York
    Replied: 8/20/2015
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