What happens to the vehicle if we file bankruptcy? 16 Answers as of April 25, 2011

After giving our son a truck bought in 06 with the title in our name , 14 months ago we signed over the title to him. We now are having to file chapter 7 . Can he keep his vehicle without the trustee trying to take it back since it's free and clear.

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The Law Office of John T. MacDonald Jr., PLLC
The Law Office of John T. MacDonald Jr., PLLC | John MacDonald Jr.
As for the ownership of the vehicle, there is a look back period for assets that given away. However, there is also the possibility that the vehicle can be exempt because some assets are exempt based on state or federal laws. It is best to contact a bankruptcy attorney because you will need to disclose all assets to see what assets are exempt. I'm a bankruptcy attorney in Lansing, Michigan - please feel free to contact me if you have additional questions.
Answer Applies to: Michigan
Replied: 4/25/2011
Bankruptcy Law office of Bill Rubendall
Bankruptcy Law office of Bill Rubendall | William M. Rubendall
A transfer to a friend, relative or insider (someone who has special knowlege of your financial situation at the time of transfer) can be set aside if the transfer incurred within one year of bankruptcy. This transfer will be okay, unless the trustee can prove fraud, which has a longer time period than one year.
Answer Applies to: California
Replied: 4/22/2011
Indianapolis Bankruptcy Law Office of Eric C. Lewis
Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
It depends on whether your son gave you fair value for the truck. If you gifted it to him, the Trustee may avoid the transfer as a preference.
Answer Applies to: Indiana
Replied: 4/21/2011
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
This might be a non-issue depending on what your other assets are. Unfortunately there is not enough information here for me fully answer this question. Not every transfer before bankruptcy results in the trustee taking the asset. You need to consult an attorney in your area.
Answer Applies to: California
Replied: 4/20/2011
Law Office of Harry L Styron
Law Office of Harry L Styron | Harry L Styron
A Chapter 7 trustee may take back property transferred to a family member within 2 years of the filing of a Chapter 7 Petitiion if (1) the trustee can show that the transfer was intended to defeat the claims of creditors (actual fraud) or (2) the trustee can show that the transfer had the effect of reducing the ability of the debtor to pay the debtor's debts (constructive fraud). The burden is on the trustee to prove the case either way. You should consult a bankruptcy attorney for the specifics of your case.
Answer Applies to: California
Replied: 4/20/2011
    Greifendorff Law Offices, PC
    Greifendorff Law Offices, PC | Christine Wilton
    There is a two year look back period and you must disclose this transfer in your bankruptcy papers. I suggest you consult with an attorney to determine whether this can be exempted from the trustee's taking.
    Answer Applies to: California
    Replied: 4/20/2011
    Burnham & Associates
    Burnham & Associates | Stephanie K. Burnham
    Normally a gift to family or friends prior to filing a Bankruptcy is something that the Trustee will look to recapture to pay your Creditors. However, the Trustee usually only looks for anything gifted during the preceding year. In the event that the gift is over a year old it should be exempt.
    Answer Applies to: New Hampshire
    Replied: 4/20/2011
    The Law Offices of Benjamin C. Tiller, Esq.
    The Law Offices of Benjamin C. Tiller, Esq. | Benjamin Tiller
    It will depend on whether you were (a) insolvent; (b) became insolvent because of the gift; (c) intended to incur debts beyond your ability to pay them. If not, then you should be OK. Don't go it alone, though . . .hire an attorney!
    Answer Applies to: Montana
    Replied: 4/20/2011
    The Law Office of Mark J. Markus
    The Law Office of Mark J. Markus | Mark Markus
    Unfortunately, if the transfer of title to your son occurred within 2 years prior to filing your chapter 7, the Trustee can sue him to recover the value of the transfer. Depending on whether you have sufficient exemptions under applicable state law to protect the equity in the vehicle, you may wish to transfer it back into your name, then exempt it on your bankruptcy papers. (Exemption laws are based on the state where you resided for the 2 years prior to filing your bankruptcy case or, if you lived in more than 1 state during that period, in the state where you resided for the greater part of the 180 days prior to that 2 year period.) You would still have to disclose all the transfers, but doing it this way reduces the likelihood of litigation. The other alternative is to wait until at least 2 years has passed since the transfer before you file your case. That's not a guarantee that the Trustee won't sue, because different states have statutes of limitations longer than 2 years for recovery of such transfers, but it will minimize the risk and you won't need to specifically list the transfer older than 2 years on your bankruptcy papers.
    Answer Applies to: California
    Replied: 4/19/2011
    Law Offices of Joseph A. Mannis
    Law Offices of Joseph A. Mannis | Todd Mannis
    It's a transfer a trustee could take issue with, the question is would he. Depends on the value of the vehicle and how aggressive the trustee is in going after assets. If if were a cheap piece of crap, probably not an issue... If it had some real value, could be a problem.
    Answer Applies to: California
    Replied: 4/20/2011
    Law Office of David P. Farrell
    Law Office of David P. Farrell | David Farrell
    The bankruptcy trustee may seek to avoid the transfer of the truck to your son as a fraudulent transfer to an "insider" (friend or family member) especially because the truck is free and clear of any liens and encumbrances, and there is no indication that your son gave anything of value in consideration for the transfer. The Bankruptcy Code gives the trustee the power to invalidate transactions that unfairly diminish the debtor's assets available to pay creditors. A "fraudulent transfer" is a transfer of some property interest with the object or effect of preventing creditors from reaching that interest to satisfy their claims or an act which has the effect of improperly placing assets beyond the reach of creditors. So, even if the transfer was intended as an innocent gift to your son, the trustee may still seek to undo the transaction.

    The "reachback" period depends on when the bankruptcy case is commenced. For cases commenced on or after 4/21/2006, the transfer must have been made (or the debt incurred) on or within 2 years prior to the petition date. For cases filed prior to that date, the reachback period is one year. If you have any other questions about bankruptcy relief and whether or not you qualify, feel free to contact my office.
    Answer Applies to: California
    Replied: 4/20/2011
    Carballo Law Offices
    Carballo Law Offices | Tony E. Carballo
    The bankruptcy form called the statement of financial affairs requires you to disclose transfers within the past 2 years. This is because the trustee can seek permission from the court to take that property back since there was no consideration paid for the truck (it was a gift). In some cases involving fraudulent transfers the trustee can go back even 4 years.

    This is complicated and you need to seek individual advice from a local bankruptcy lawyer. It does not sound like a serious problem since it is already a 6-year old truck and it was your son to whom you transferred it and you had (I guess) bought it for him 6 years but did not get to transfer it until 14 months ago. Some trustees are more aggressive than others so you need a lawyer who can get all the information (age of son, was it financed originally, why you waited to transfer it, etc) and then make a recommendation as to whether you should file now, wait or do something else to prevent the trustee from taking the truck away from your son.
    Answer Applies to: California
    Replied: 4/20/2011
    Law Office of L. Paul Zahn
    Law Office of L. Paul Zahn | Paul Zahn
    Perhaps but it depends upon whether or not the transfer is considered fraudulent and an attempt to circumvent the bankruptcy code. A better plan, if you can do it, is to claim it as property and exempt it. If you are looking for an attorney and are in my area, please contact me for a free consultation.
    Answer Applies to: California
    Replied: 4/20/2011
    The Orantes Law Firm
    The Orantes Law Firm | Giovanni Orantes
    It depends on the value of the vehicle. Since you transferred it less than 2 years ago, you must disclose the transfer. However, whether the Chapter 7 trustee will have any interest in trying to recover it will depend on the value. If it is more than a couple of thousand dollars and you have enough exemption funds available, you may want to have him sign the title back to you so you can apply your exemptions to protect it, which you cannot do if the property is not yours anymore. Call us for a free consultation.
    Answer Applies to: California
    Replied: 4/20/2011
    Bankruptcy Law Office of Robert Weed
    Bankruptcy Law Office of Robert Weed | Robert Weed
    The trustee has the right to go after it. Whether he will depends on how much it is worth. Was it a new truck in '06? Or in '06 did you buy a '98. Is it an F150 or an F350?
    Answer Applies to: Virginia
    Replied: 4/20/2011
    Ferguson & Ferguson
    Ferguson & Ferguson | Randy W. Ferguson
    That will be up to the trustee. That is one of the questions you must answer. (Have you transferred anything) You should sit down with an attorney and discuss your case.
    Answer Applies to: Alabama
    Replied: 4/20/2011
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