What to Do When You Have Been Accused of Wrongfully Disposing of Assets
The bankruptcy laws were enacted to give debtors a “fresh start”, and to ensure that petitioners were not rendered destitute. Accordingly, even in a Chapter 7, where you can permanently discharge debt, you are allowed to keep a certain amount of your property. You may have a desire to minimize the impact of a bankruptcy filing by giving or transferring property to another person immediately before or even after you file your petition. It’s rarely a good idea, unless you can show that you sold the assets for fair market value. Otherwise, it will be considered a fraudulent transfer.
If the trustee or a creditor suspects that you wrongfully transferred assets for the purpose of keeping them out of your bankruptcy estate, you may face legal action within the bankruptcy, through what’s known as an adversary proceeding. If that happens, here’s what you should do:
- Recognize that it’s a serious matter?Hire an experienced attorney to protect your rights. Gather any documents you have relating to the transaction, showing when the transfer was made, why it was made and what the fair market value of the item was when you sold it.
- Understand that fraud requires intent, so a fraudulent transfer must have been done with knowledge (or reason to know). Look for evidence that show that you didn’t know of the transfer, that you didn’t know it was wrongful, or that you had no intent to keep assets away from your creditors.
Contact Our Offices
At the Law Office of Andrew B. Finberg, LLC, we bring comprehensive bankruptcy counsel to individuals in Burlington, Camden and Gloucester counties in New Jersey. To schedule an appointment, call our office at 856-988-9055 (toll-free at 866-721-7269) or contact us online.