Should You Sell Your Vehicle Prior to Bankruptcy Filing?

  • Bankruptcy Filing

Should You Sell Your Vehicle Prior to Bankruptcy Filing?

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If you have accumulated a huge amount of debt because of a long and continuous unemployment period, then bankruptcy could be an easy way out. However, if you are contemplating bankruptcy and you possess two vehicles, both of which are paid for; could you sell one of those and then file of Chapter 7 bankruptcy as per Dallas based bankruptcy law firm lawyers, it depends on individual situations.

Since any transactions done prior to bankruptcy filing are scrutinized by the bankruptcy trustee, selling a vehicle prior to bankruptcy might be considered a pre-bankruptcy transfer, which may or may not be allowed. The primary consideration, in this case, is whether the property would have been exempted in bankruptcy. other factors worth considering are the price you got for the vehicle as well as what was done with that money.

In case the property was exempt, any transfer or selling of property before filing for bankruptcy would not be a problem, but it can certainly cause a delay in the bankruptcy process. The trustee needs to be sure that you got the fair market price of the asset which was an exempted property. a bankruptcy attorney can help you determine which of your properties are exempted and up to what amount. You can consult with experienced bankruptcy attorneys regarding your case by calling 888-297-6023.

If the property is not exempted and you wish to file for bankruptcy, you need to exercise some caution. Consulting with an attorney prior to making any pre-bankruptcy transfer is essential. Bankruptcy trustees, comb through every financial transaction in detail, especially ones that took place just before the bankruptcy filing. In case you didn’t get a fair market value of the asset, the trustee might undo the transfer and add the fair market value to the bankruptcy estate. Generally, any transfers done between 2-5 years are considered.

Your intent regarding the selling of an asset or any transfer is also of consideration to the trustee. This can be assessed by knowing the new owner of the concerned property, whether you tried hiding the transfer and your financial situation around the concerned duration. If you used the money gained from the selling of non-exempt asset for paying down mortgage or for home improvements can be problematic. No issues are made if the amount was used for regular mortgage payments or maintenance and repairs in your home. Consulting with a bankruptcy attorney before making any financial decision is important.