Ten Reasons to Delay Filing Bankruptcy! Reason No. 4: Pre-Bankruptcy Transfers
By Kevin Gipson, New Orleans Bankruptcy Attorney on Mar 30, 2009 in Bankruptcy Practice and Procedure, Chapter 7 Bankruptcy, Debts Not Dischargeable
In determining when to file a bankruptcy consideration should be given to whether you have made any transfers which can be reversed. In certain situations the Trustee or a Creditor may be able to recover property or money that has been transferred and have those assets brought back into the bankruptcy estate to be available to pay your unsecured creditors.
Maybe you owe money to a friend or relative and want to make sure they get paid and you pay them before you file for bankruptcy.
Under the Bankruptcy Code this transfer is considered to be a Preferential Transfer of property if the transferred property is worth more than $600.00, gave that creditor more than it would have received through a Chapter 7 bankruptcy, and the transfer was made within ninety days of filing bankruptcy.(If the creditor is an insider, then the time period is one year instead of ninety days).
If you care whether or not the creditor has to return the transferred property then you might want to wait until ninety days has passed from the time of the transfer before filing for bankruptcy.
It should be noted that while a Preferential Transfer can be reversed, such a transfer does not have any impact on your ability to obtain a discharge.
On the other hand a more serious transfer that can result in an objection to your discharge is a transfer that is made “…with the intent to hinder, delay or defraud creditors…” that is made within one year of filing for bankruptcy. A transfer that falls within this definition can result in an objection to your discharge in a Chapter 7 bankruptcy. Waiting a year from this type of transfer will limit the effect of the transfer on your discharge.
There are other factors that need to be considered when deciding when to file a bankruptcy, and every case is different.
Contact an attorney experienced in Bankruptcy law such as those on the Bankruptcy Law Network in order to get the advice you need to make the best decision for your situation.
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