One of the biggest concerns people have is how to protect assets from bankruptcy when filing. Bankruptcy offers several benefits to those who opt to file, but these benefits are in exchange for turning control of assets over to the bankruptcy court and the trustee appointed to the case. The trustee has the power to liquidate assets and use the money from the liquidation to pay creditors.
Bankruptcy trustees have a significant amount of power. If they suspect you’ve done anything wrong or tried to hide assets in your case, they can use the power of the court to deal with the matter. If they accuse you of fraud or hiding assets, you could face criminal charges, and your chances of receiving debt discharge significantly decreases.
Working with an experienced bankruptcy attorney helps you avoid problems with the trustee, while still making the most of the asset protection tools available to you. You can learn more about the protections offered by bankruptcy here.
What do you need to know about protecting assets from bankruptcy when you file?
The Court Discourages Most Asset Transfers Just Before Filing for Bankruptcy
Some people assume they can protect their assets from the bankruptcy court by transferring ownership to someone else. They plan to re-buy the asset or transfer ownership back once their case concludes.
Unfortunately, asset transfer just before bankruptcy can be a costly legal mistake.
Trustees review all of your financial information. If they suspect any attempt to hide, control, or transfer an asset, it puts your entire case at risk. Not only is that asset at risk, but you could also lose all of the protections and benefits bankruptcy provides. Even if your case proceeds, you’ll lose the ability to claim the asset in question as an exemption, had that been an option to begin with.
Bankruptcy Exemption Laws are Complicated
One of the biggest reasons you need to work with an experienced bankruptcy attorney is because of how complex laws regarding exemptions can be. They vary from state to state and can be different based on a person’s specific financial situation. There are limits regarding the value and type of exemptions. If someone misunderstands these rules when filing, it could result in the loss of an exemption. And that exemption would have protected their property had it been properly applied.
Even a simple mistake on your bankruptcy schedules could put a valuable asset at risk of disapproval of an exemption. The same is true if the trustee suspects fraudulent transfer, inequitable conduct, hiding assets, or misrepresenting the value of an asset. A bankruptcy attorney helps you avoid honest mistakes and ensures that your assets and exemptions are handled properly in your case.
There is a great deal of information available online regarding bankruptcy laws. You can even get a good idea of what the laws are in your jurisdiction. But even with this information available, it’s important to speak to an experienced professional. This person knows how to apply the guidelines and laws to your specific situation. Speaking to a bankruptcy attorney helps you determine which of your assets are exempt and not exempt. It also helps you protect as many assets as you possibly can without breaking the law.
If you’d like to discuss your financial situation or you have questions about how to protect assets from bankruptcy, we can help. Contact R. Flay Cabiness, II, P.C. at (912) 417-5041 (Brunswick, GA); (912) 809-2141 (Hazlehurst, GA) or; (912) 324-3176 (Jesup, GA) to schedule a consultation.
