Filing for bankruptcy is a big decision, but one that can help relieve individuals and businesses from overwhelming debt. Before filing for bankruptcy, you may wonder whether you can sell your assets to either pay off debts or retain the value of the property. The answer depends on a variety of factors. Understanding the rules and potential consequences of selling your assets before filing is crucial so you can make an informed decision and protect yourself throughout the process. Continue reading and work with an experienced Bergen County bankruptcy lawyer for skilled assistance today.
Can I Sell Assets Before Filing for Bankruptcy?
Yes, you have the right to sell property and assets before filing for bankruptcy. However, it is important to keep in mind that you must pay your creditors and taking any action to deprive them of the money you owe can be considered fraud so selling comes with serious legal risks.
You will likely only consider selling non-exempt assets, meaning property that is not protected by bankruptcy laws and that will generally be sold under Chapter 7 regulations. If you need money for necessities, you can sell property. Whether you have to buy food, supply your children with clothing, pay rent, cover medical expenses, etc., you are permitted to sell non-exempt assets to help you cover these costs.
If you do not need to sell your assets before filing then it is best to proceed with caution and get legal advice before selling off your property.
What Are the Risks of Selling Assets Before Filing?
One of the main risks of selling assets before filing for bankruptcy is being accused of a fraudulent transfer. An example of a fraudulent transfer could be selling or transferring assets to a friend or relative to hold until they can return the property to you. Selling at a price well below market value could also be considered fraudulent and an attempt to avoid paying back creditors.
If assets are sold improperly, the bankruptcy trustee could recover the property or equivalent value from the buyer. You could also be charged with fraud or have your bankruptcy case dismissed, meaning you will not get the debt relief you need.
If the assets are sold for a fair price and the proceeds are used to cover necessities, pay back creditors, or deal with debts in any other way, the sale will not likely be considered fraudulent. However, bankruptcy law is complex, so it is not recommended that you act without first consulting an experienced attorney.
Reach out to a skilled bankruptcy attorney today at the Law Office of Boyd & Squitieri to set up your free consultation and secure knowledgeable legal advice and representation.
