Should I Give Some Things Away Before Filing for Bankruptcy?

 Posted on September 18, 2024 in Bankruptcy

When you are planning to file for bankruptcy soon, it can be very tempting to give away assets you do not want to be liquidated. It may even have occurred to you that you could transfer a few things into a family member’s name on paper while continuing to use them yourself as a means of protecting them from being liquidated during Chapter 7 bankruptcy. This strategy is unlikely to work out as well as you had hoped. If you are found to have given away or retitled valuable assets shortly before filing for bankruptcy, the court is likely to find out and believe that you were acting in bad faith. A San Antonio, TX bankruptcy lawyer can help you protect as much of your property as possible through legal and legitimate means.

Gifts Made in Bad Faith Before Bankruptcy 

Bankruptcy courts often become very suspicious when a person transfers valuable property to another person shortly before filing for liquidation bankruptcy. Making substantial gifts of your own personal property - or worse, real property - just before starting the bankruptcy process tends to make it look like you are not submitting to the liquidation process in good faith. For example, if you abruptly transfer your vacation home or your "fun" car to your adult child a few weeks before filing, it is quite clear that you are likely to continue using these items and the title transfer was only done to avoid liquidation.

Giving Normal Gifts Before Bankruptcy

While giving things away to conceal them from the court is not likely to end well, making normal and reasonable gifts before bankruptcy is not usually a problem. For example, if your granddaughter happens to have a birthday a few weeks before you expect to file, giving her a reasonable birthday present is not likely to cause issues. Giving her a new outfit is probably acceptable - giving her your vacation home is probably not.

Likewise, giving away property that is of little to no monetary value, such as by handing down a box of old clothes, is not likely to be a concern.

Giving Away Property May Not Help 

There are quite a few items that are exempt from the liquidation process. Most people can keep the vast majority of their personal property, usually including a vehicle. Giving possessions away may be completely unnecessary, as many items would not be liquidated anyway.

Contact a Bexar County, TX Bankruptcy Attorney 

Law Offices of Chance M. McGhee can help you avoid mistakes that could cost you during the bankruptcy process. Experienced San Antonio, TX bankruptcy lawyer Chance McGhee will preserve as much of your property as possible during liquidation. Contact us at 210-342-3400 for a complimentary consultation.