Many of the clients who come to see us at one of our Bankruptcy Law Offices in Oregon or Washington bring in a list of concerns. One issue that almost comes up is the fear of what will be lost in bankruptcy. The suspicion is that the greatest risk of loss will come from the extent of the filers personal property and yet that is rarely the case.
The Chapter 7 Bankruptcy Trustees in Portland, Vancouver and Salem are rarely a position to take anything from our clients because we make sure that our clients are properly protected. When our clients do lose something, it’s usually not what they own, but what they did the year before they filed that they didn’t disclose to us until the day of the hearing.
TREATING CREDITORS FAIRLY
The Bankruptcy code requires you to treat all creditors fairly. This means that you are not allowed to pay off preferred creditors (such as family members) prior to filing for bankruptcy so that other creditors don’t receive anything. In certain circumstances, the trustee can avoid preferential payments and recover that money to distribute among all your creditors.
In your bankruptcy petition, you must typically disclose any amounts totaling over $600 repaid to any friend or family member in the last year. If the Trustee is able to establish that you have repaid that amount in the last year, one of two things will happen. Either your or your friend/family member will be cutting a check to the Trustee for the amount repaid.
If you have repaid over $600 in the year to any friend or family member, please let us know so that we can find a solution. Often there are ways to undo the transaction, but we can’t undo it if we don’t know about it. More important, going forward, do not repay any money to a friend or family member until your case has been filed.
You will also want to avoid repaying over $600 to any run-of-the-mill creditor in the 90 days prior to filing as the Trustee can reclaim these funds as well. Exceptions to this would be a secured loan like a mortgage or car loan.
If you transfer property out of your name prior to filing for bankruptcy, you may be committing bankruptcy fraud. Bankruptcy fraud may be actual (transferring property with intent to defraud your creditors) or constructive (transferring property for less than fair market value while you are insolvent). This is not the time to transfer property to anyone.
If you make a fraudulent transfer, the trustee may be able to challenge your discharge or avoid the transfer and get the property back. So the trustee will also be looking for recent transfers of property that may be deemed fraudulent.
So it’s rarely the value of your household stuff, the car or the jewelry that matters for purposes of keeping all your stuff in an Oregon or Washington Chapter 7 bankruptcy. It’s what happened in the time leading up to your filing that matters most. We just need to know about it so that we can help.
If you do have a question about money that was repaid, property that was sold or stuff that was either given or sold for less than face value, let us know. If you haven’t seen one of our attorneys yet, book a Skype appointment with me or, better yet, set an appointment at one of our offices in Portland, Salem, Vancouver or Sandy so that we can come up with a strategy for allowing you to keep all your money in bankruptcy. Who needs to repay a debt for seven hundred bucks to a friend and then repay the same seven hundred to a bankruptcy trustee? Not you.