As a Sacramento Bankruptcy Lawyer I often talk to my clients about what is part of the bankruptcy.
In today's post we'll continue to examine the concept of the bankruptcy estate. Last week we began taking a look at what kinds of property are included in your bankruptcy estate (the property which is subject to the court's control once you file for bankruptcy).
Today we'll look at another type of property which is included in the bankruptcy estate - property recently given away.
People considering bankruptcy often consider giving away property to friends or family before they actually file. This is done in the hopes of eluding the reach of the bankruptcy court and benefiting loved ones in lieu of creditors. This is an imprudent action.
When you file for bankruptcy you must itemize all property transactions entered into in the last two years before filing. Intentionally leaving out a transaction will be considered perjury. In addition, if it comes to light that you didn't get fair market value for the item in question the trustee assigned to your case can recapture the property and sell it in order to compensate your creditors.
The bankruptcy system exists to help out essentially honest people who made financial mistakes. However, the court comes down hard on people trying to game the system. Remember, it's no crime to sell or give away property before filing for bankruptcy. But all such transactions must be listed with complete accuracy. Then at least you'll be able to rest easy in the knowledge that you've completed your part of the bargain.
