Transferring or selling non-exempt property prior to filing for bankruptcy can be risky as this can be considered fraudulent and may result in complications. If you have already sold assets and are considering bankruptcy, it’s important to consult with an experienced New City Bankruptcy Attorney to understand how your actions may affect the outcome of your case and to receive guidance on the best course of action given the unique circumstances of your situation.
Should I Sell Assets Before Filing Bankruptcy in NY?
While it’s generally legal to sell assets before filing for bankruptcy, it’s crucial to understand the potential consequences. Doing so could be perceived negatively during your bankruptcy proceedings and may even lead to a denial of discharge or criminal charges of fraud in certain circumstances.
It’s advisable to prioritize the sake of exempt assets if you need to liquidate your possessions. Exempt assets are protected from liquidation to repay creditors during bankruptcy, whereas non-exempt assets can be used for this purpose. You should note that selling a luxury item, such as a designer purse, to settle a debt may seem like a straightforward solution. However, this action could be interpreted as favoring one creditor over others. This action could also be seen as depriving creditors of assets.
Conversely, selling assets like a vehicle to cover essential living expenses such as rent or groceries is often acceptable. However, it’s necessary to maintain meticulous records of these transactions. Selling assets before filing bankruptcy is not recommended as it could lead to complications with the bankruptcy process.
What Should I Do if I’ve Already Sold Assets?
If you have sold assets that you believe may be considered non-exempt property prior to filing for bankruptcy. It’s crucial to consult with an experienced bankruptcy attorney as soon as possible to discuss your legal options. They can thoroughly assess your situation, examine the specific transactions and assets involved, and advise you on the potetnial consequences and the best course of action to protect your interests. Depending on the circumstances, the bankruptcy trustee may be able to recover the proceeds from the sale of non-exempt assets for the benefit of creditors.
It’s important to note that transferring assets to friends and family before filing for bankruptcy can be viewed as a fraudulent conveyance or an attempt to hide assets from the bankruptcy court. This can have serious repercussions, including the denial of your bankruptcy discharge, meaning your outstanding debts won’t be forgiven. In addition, you could face legal action, steep monetary fines, or even criminal charges for committing bankruptcy fraud. As such, it’s imperative to be transparent with your attorney and the court about all your assets and transactions to avoid these potential consequences.
A seasoned New York City bankruptcy attorney from The Lauterback Law Firm can help guide you through the process, safeguard your rights, and help you achieve the best possible outcome in your bankruptcy case. Connect with our firm today for more information.
