Financial desperation can cause people to make poor choices that cascade into even more problems. Transfers that sound like a good idea end up backfiring. Family members, spouses, and friends are often left in the wake of a financial catastrophe.
To minimize the consequences of bankruptcy and maximize the potential advantages it has to offer, you need to talk with a bankruptcy lawyer. They will let you know what to do in the time leading up to filing and help you minimize the impact it might have on family members who’ve helped you get through tough times.
Preferences and Fraudulent Conveyances
Family members are normally the first people to help in times of financial burden. If bankruptcy is inevitable, people know they are going to have some of their assets taken away to pay creditors. In desperation, debtors give their assets to family members or pay them back for the help they’ve provided.
Unfortunately, these transfers are easily traceable. Upon filing for bankruptcy, if you’ve tried to pay back friends or family members who have helped you in the prior year, you’ve shown preference. The trustee can pursue these funds. If the person who received the transfer no longer has access to the funds you provided them, they are put into an even worse position than if you never made a transfer at all.
Assets that have been transferred as gifts are also available to the trustee. In most states, anything that was given in the last two years, and sometimes up to five, can be included in the bankruptcy estate. Since people don’t want to lose property to their bankruptcy, they give it to a family member. Unfortunately, this doesn’t provide the land with any additional protection. Instead, the fraudulent transfer exposes the recipient to added risk since it can be taken away.
Talk before you act
In the face of insurmountable debt, bankruptcy lawyers will know what you should do and when you should do it. Before exposing your friends and family to unnecessary risks, talk to a lawyer. Northwest Debt Relief Law Firm will help you find the best path for regaining your financial freedom.