When you’re in debt, you may make the decision to sell assets as it may seem like the best course of action. However, if selling assets isn’t enough, you may make the difficult decision to file for bankruptcy. Unfortunately, you may find that doing so can negatively impact the outcome of your subsequent bankruptcy case. If you’re ready to pursue your bankruptcy case but you have already sold assets, you’ll want to keep reading. The following blog explores the importance of connecting with an Orange County consumer bankruptcy lawyer if you’re ready to pursue a filing.
Should I Sell Assets Before Filing for Bankruptcy?
Generally, there is no law that says if you plan on filing for bankruptcy you cannot sell assets prior. However, it’s important to understand that doing so can be held against you during your filing. In some instances, it can prevent you from receiving a discharge and in some instances, result in criminal charges of fraud against you.
You should note that if you want to sell assets, choosing to sell exempt assets is generally in your best interest, as you’ll find that these assets cannot be liquidated to repay creditors, whereas nonexempt assets can be used.
Say you sell a luxury asset, like a designer coat, to pay a debt you owe. Though this may seem like an easy decision to make, it can be held against you by the bankruptcy court. This is because it may seem like you are preferring one creditor over the other. Additionally, selling assets can make it seem as though you are intentionally depriving creditors of assets.
However, if you are selling assets like a car or boat to make rent or pay for groceries, this generally won’t be an issue. If this is the case, however, you should keep a detailed record of the transactions including the sales records and receipts for purchases made using the funds from the sale.
What Should I Do if I’ve Sold Assets?
If you have already sold assets before your bankruptcy filing and you believe the assets you sold may have been considered non-exempt property, you may be worried about your options. If this is the case, generally, it’s in your best interest to discuss your legal options with an experienced bankruptcy attorney. They can examine the circumstances of your case to help you determine the best course of action.
You should also note that transferring assets to friends and family before your bankruptcy filing can have similar consequences. This can be viewed as an attempt to defraud the bankruptcy court by shielding assets that would otherwise be seized.
As you can see, selling assets before you file for bankruptcy can have several consequences. As such, it’s in your best interest to connect with an experienced attorney to guide you through these difficult matters. At the Law Offices of Michael D. Pinsky, P.C. we understand how difficult these matters can be. Contact us today to learn how we can fight for you during these difficult matters.
