When you finally reach the point where bankruptcy makes sense, there are a lot of worries and questions. Indeed, the entire process is rife with questions and concerns. However, some people worry that they may have to sell all of their stuff to qualify for bankruptcy, which leads some to wonder if they should just start giving away their stuff now to their Greensburg, Pennsylvania, friends and family. After all, it is better if they get it than the credit card company, right? Wrong.
At the beginning of your bankruptcy proceeding, you must outline all the property you have transferred (sold or given away) within the prior 2 years, generally. However, other transfers may look back a decade or more. And, if the bankruptcy trustee believes that any of those transfers were improper or fraudulent, the transactions can be undone.
The right to transfer
This look-back period does not mean that you are not allowed to transfer your property. Instead, you can do whatever you want with your property. However, once you file bankruptcy, those transaction could qualify as improper or fraudulent transfers under the federal Bankruptcy Code.
What qualifies and does not qualify
Lending items, even big-ticket items, do not qualify as a transfer. As such, if you lend your car to your child to get back and forth from work and school, that is not a transfer. Reasonable gifts for special occasions, birthdays and holidays also do not qualify. However, the size of the gift should be commensurate with the event. Donations also would likely not qualify, as long as they are reasonable and less than 15% of your gross annual income.
Not everything is liquidated
While Chapter 7 bankruptcy is often referred to as liquidation bankruptcy, that is actually a misnomer. For most Greensburg, Pennsylvania, Chapter 7 bankruptcy filers, the exemptions for vehicles, personal property and the family home allow you to keep a lot of your stuff, including those big-ticket items, like your car, family home, etc.
The primary takeaway from this Greensburg, Pennsylvania, blog is that you should talk with your attorney before doing anything rash. Even if it is just to get information on bankruptcy, understanding what you can and cannot do has a huge impact on your bankruptcy options later.