What should I do with my childrens cars in my bankruptcy? 15 Answers as of June 09, 2011

All of my children bought their first autos when they were minors. The cars were all titled in my name because they were minors. Now they are all grown up and I am having terrible financial trouble and must file bankruptcy. I had all the titles transferred into the childrens name before talking with an attorney and I have not initiated anything yet. But I am reading through your website and all the Q&A's here and I wonder if that will cause me problems when I do file BK. Will it look as though I am trying to hide assets? I didnt want the kids vehicles to come into question with my BK and that is why I transferred them to the kids. I should have done it a while ago but just never had the inclination to spend the time or effort or money standing in line at the DMV. I appreciate your insights into this. Is this a problem for me? Should I wait a period of time to file after this? Thanks for your help.

Ask a Local Attorney. 100% Anonymous. Free Answers.

Free Case Evaluation by a Local Lawyer: Click here
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
If you disclose the transfers that will generally resolve most issues surrounding the cars, especially If they are of inconsequential value. I would really need to know what else you own to fully answer this this question.
Answer Applies to: California
Replied: 6/9/2011
Law Office of Maureen O' Malley
Law Office of Maureen O' Malley | Maureen O'Malley
Yes, if the titles were transferred recently it will appear that you transferred assets to avoid the ability of creditors to reach them and thus the bankruptcy will be denied. Because they're family, you'd have to wait something like 3 years before you could file. It might be possible to re-title them in your name and then file. Or file and disclose the transfer. Questions are whether the cars are paid for and whether they have any equity. If not paid for, then the trustee would have no interest in them. If paid for but little equity, the trustee may still be disinterested. You really should see an attorney to determine your best course of action.
Answer Applies to: Virginia
Replied: 6/9/2011
Carballo Law Offices
Carballo Law Offices | Tony E. Carballo
Those transfers have to be reported in your Statement of Financial Affairs which must be filed as part of your bankruptcy petition. The trustee can ask the court set aside the transfers and recover the vehicles to be sold in order to pay for your debts. In some cases the trustee can go back up to four years to set aside a transfer of an asset although usually two years is the limit to set aside a transfer. Depending on the value of the vehicles and when you made the transfer that could be a problem. You need to write down all the information, such as dates of transfer and value of vehicles, and see a bankruptcy attorney for advice on whether you should file now or wait. You could argue that the cars were not really yours and you were only on title because the kids were minors when the vehicles were bought but that is risky if the trustee disputes that and goes after the vehicles.
Answer Applies to: California
Replied: 6/8/2011
Bird & VanDyke, Inc.
Bird & VanDyke, Inc. | David VanDyke
All transfers of assets made within 2 years of the filing for bankruptcy must be disclosed in your paperwork filed with the court. Unfortunately you did what a lot of people do. Now you have several property transfers made prior to filing for bankruptcy without receiving adequate consideration. The court will essentially treat these as gifts of assets prior to your filing and these transfers could be set aside by the court. In other words, worst case scenario, the court will take them all and liquidate them. What most people don't understand is that bk law provides a debtor with liberal exemptions which most likely would have allowed you to keep these assets, file bk and afterward transfer your assets to anyone you like. There may be some things you can do to fix this but you need to discuss it with a Bk attorney.
Answer Applies to: California
Replied: 6/8/2011
Indianapolis Bankruptcy Law Office of Eric C. Lewis
Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
Timing is everything in bankruptcy. Any transfers to family members within a year of filing bankruptcy can be reversed and made part of the bankruptcy estate and if no exemption is available, the assets may be seized and liquidated by the bankruptcy trustee.
Answer Applies to: Indiana
Replied: 6/8/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    When you transferred title to the cars in your name to your children you created a voidable transfer. The trustee can now recover title for the bankruptcy estate. The timing is one year prior to the bankruptcy. You would have to wait one year before losing the cars to the trustee. You might want to have the cars transferred back to your name prior to filing bankruptcy.
    Answer Applies to: California
    Replied: 6/8/2011
    Law Office of Harry L Styron
    Law Office of Harry L Styron | Harry L Styron
    It depends on whether you will file a Chapter 13 or Chapter 7. In the 13 it doesn't matter, but you will pay off some of your debt over the life of the Chapter 13 plan. In a 7 any transfer without consideration within two years of filing the Petition to a related party may be set aside by the trustee. But that depends on whether the children paid for the cars when they "bought" them. If they did, and you simply have bare legal title, then the transfer of that title to the child is probably okay. However, if the trustee challenges a transfer you will have to be prepared to prove that the children paid for the cars.
    Answer Applies to: California
    Replied: 6/8/2011
    The Law Office of Mark J. Markus
    The Law Office of Mark J. Markus | Mark Markus
    It depends on when title was transferred. If it was more than 2 years ago, you're probably OK (although some state's fraudulent transfer statutes look back 4 or more years). If the transfer took place within the past 2 years, then it's something you will have to disclose on the bankruptcy papers and depending on the value of the vehicles at the time of the transfer, as well as what chapter you file, there is a risk that the Trustee could sue your children to recover the value of the transfer. The other thing you can do is to transfer title back to yourself and then exempt (if possible) the equity in the vehicles. This assumes, of course, that you have sufficient exemptions under applicable state law to protect the equity. You need to have a comprehensive consultation with a bankruptcy attorney in your area.
    Answer Applies to: California
    Replied: 6/8/2011
    Law Office of J. Thomas Black, P.C.
    Law Office of J. Thomas Black, P.C. | J. Thomas Black
    We have this come up from time to time and it has not been a problem for our clients, at least here in this district, the Southern District of Texas. If your children paid for the vehicles, I think you are definitely on solid ground, because you would be able to show the Bankruptcy Court, if necessary, that your children had equitable title to the vehicles all along, as opposed to only legal title. In the alternative, if you gave the vehicles to them as a gift, and it was several years ago, before you had financial troubles, I don't think that is anything that would cause you a problem, either. And as to the recent transfer of the legal title, from your answer I don't think that you did that with the intent to deprive your creditors of anything, just to put the legal title in line with the true, equitable owners of the vehicles, the children. And even if a bankruptcy Trustee could reverse the transfer of the legal titles, I still think you could argue that his title is still subject to the true equitable ownership interest of your children. Section 541(d) of the Bankruptcy Code provides that property of a debtor becomes property of the bankruptcy estate "only to the extent of the debtor's legal title to such property, but not to the extent of any equitable interest in such property that the debtor does not hold." But by all means, review all the facts and circumstances of your situation with your bankruptcy attorney, before the bankruptcy filing. And hire a knowledgeable and experienced bankruptcy attorney, preferably one that specializes in bankruptcy matters. I am Board Certified in Consumer Bankruptcy Law by the Texas Board of Legal Specialization.
    Answer Applies to: Texas
    Replied: 6/8/2011
    Burnham & Associates
    Burnham & Associates | Stephanie K. Burnham
    Gifts made to an Insider (like your children) will need to be reported within one year of filing a Bankruptcy. You should discuss with a Bankruptcy Attorney how to appropriately plan for filing.
    Answer Applies to: New Hampshire
    Replied: 6/8/2011
    Law Office of Asaph Abrams
    Law Office of Asaph Abrams | Asaph Abrams
    The Bankruptcy Code look-back period for "fraudulent transfers-" which is not strictly a function of intent, but of objective circumstances at the time notwithstanding good intentions is 2 years. However state fraudulent transfer statutes also dictate treatment. In CA, the usual look-back period for fraudulent transfers is 4 years. Yes, this is a problem. The values of the vehicles is significant. You must discuss all facts with a bankruptcy attorney pronto. See 11 USC Section 548 and CA CCP 3439.09 and consult with an attorney regarding any transfer issues.
    Answer Applies to: California
    Replied: 6/8/2011
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    I hate to tell you but you appear to have screwed up very badly. The transfer of titles to a relative can result in many things including denial of a bankruptcy discharge, loss of the cars, and even criminal prosecution. Even two year old transfers MUST be reported to the court. Discuss this with your lawyer. And do not do anything else before you see your lawyer. You probably did something unnecessary and foolish. If you had kept the cars in your name, depending on the value, you might have been able to keep them anyway using exemptions in the bankruptcy code. By transferring them, you lost those exemptions and the court may be able to sue your children.
    Answer Applies to: Georgia
    Replied: 6/8/2011
    Jackson White, PC
    Jackson White, PC | Spencer Hale
    Have you hired an attorney yet? Talk to him/her about it. So long as the transfer is disclosed and value of your interest in the vehicles is disclosed I don't think you should have a problem. You just need to make sure you deal with it appropriately in the schedules. Make sure your attorney understands that these transfers occurred and must be disclosed properly.
    Answer Applies to: Arizona
    Replied: 6/8/2011
    Law Office of L. Paul Zahn
    Law Office of L. Paul Zahn | Paul Zahn
    Depending upon how you use your other exemptions, it might be best to list the cars as your assets and exempt them, if possible. If you are in my area and are looking for an attorney, please contact me for a free consultation.
    Answer Applies to: California
    Replied: 6/8/2011
Click to View More Answers:
12 3 Free Legal QuestionsConnect with a local attorney