In my many years as a Denver Bankruptcy Lawyer, I have heard the above questions from good, honest people who are frightened they might lose their car or home if they file bankruptcy, and wonder if they should transfer these assets to a relative or friend to protect them before they file.
THE ANSWER IS ABSOLUTELY NOT—YOU SHOULD NEVER ATTEMPT TO HIDE ASSETS OR TRANSFER ASSETS TO FRIENDS OR RELATIVES IN ORDER KEEP THEM OUT OF THE BANKRUPTCY!
These activities can have severe penalties, including criminal penalties for bankruptcy fraud. Bankruptcy, when done with full disclosure and honest, truthful intent is a very good deal. If you cannot pay your debts, they are cancelled, and you receive a fresh start. Trying to “game” the system by improper transfers is a disaster.
BUT, the silver lining to this problem is that most normal, necessary assets are protected in bankruptcy through the exemption laws that provide protection to almost all the assets people need.
For example, you home is protected up to $60,000 equity ($90,000 for folks over 60), your 401k or IRA is exempt, you cars are protected up to $5000 equity (based on wholesale value), and there are many other exemptions that covers most people’s things.
So… if you are worried about assets in bankruptcy, review this issue with a chapter 7 bankruptcy lawyer BEFORE making any type of transfer. Most times, your property will be exempt, and you do not have to make any illegal transfers, and still protect everything you own.
Call me, Peter Milwid, at (303) 831-0733, if you have any questions about asset protection in chapter 7 bankruptcy.