Texas Bankruptcy Blog : Texas Bankruptcy Lawyer & Attorney : Fears Nachawati law Firm : Chapter 7, Chapter 13, Consumer Bankrutpcy : Dallas, Fort Worth, Austin, Houston, San Antonio

Individuals are required receive credit counseling from an approved agency within 180 days before the bankruptcy filing date. This requirement was enacted in 2005 as part of the Bankruptcy Abuse Prevention and Consumer Protection Act, and is meant to encourage debtors to pursue non-bankruptcy alternatives. In reality, pre-bankruptcy credit counseling has no impact on the number of bankruptcy cases filed.

In a few limited circumstances credit counseling is not required. These circumstances are identified by the federal law as:

(1) incapacity where the person is so impaired by reason of mental illness or deficiency that the individual is incapable of making rational decisions;
(2) disability where the person is so physically impaired that the individual is unable, after reasonable effort, to participate in an in person, telephone, or Internet briefing session; or
(3) active military duty in a military combat zone (currently Arabian Peninsula Areas, Kosovo area, and Afghanistan).

The law allows individuals to receive credit counseling after the bankruptcy filing under the following conditions:

(1) exigent circumstances exist that merit a waiver;
(2) the individual requested credit counseling services from an approved nonprofit budget and credit counseling agency, but was unable to obtain the services during the 5-day period before filing bankruptcy; and
(3) the request and explanation is satisfactory to the court.

Note that procrastination, inability to pay for the counseling, incarceration, etc. are not part of this list. The bankruptcy court is very reluctant to approve waivers except in the most extreme circumstances. A pending lawsuit or foreclosure alone is not enough.

Only agencies approved by the Department of Justice’s U.S. Trustee Program can issue pre-bankruptcy credit counseling certificated that are accepted by the bankruptcy court. Each agency is required to provide the service free of charge if you cannot afford to pay the credit counseling fee. Otherwise, the agency will charge a fee of around $50. The session will last approximately 60 to 90 minutes and includes an evaluation of your personal financial situation, a discussion of alternatives to bankruptcy, and may include a personal budget plan. This counseling session may take place in person, on the phone, or online.

Once your credit counseling session is completed, a certificate is issued which must be filed with your bankruptcy case. Failure to complete the credit counseling or file the certificate will result in the dismissal of your bankruptcy case.

Your bankruptcy attorney will recommend trusted credit counseling agencies. Discuss the credit counseling process with your attorney if you have questions. Do not overlook this mandatory credit counseling! 

The Bankruptcy Code is divided into several chapters that relate to specific bankruptcy actions. The two most common types of individual bankruptcies are found in Chapter 7 and Chapter 13 of the Bankruptcy Code. The choice of filing a case under one of these chapters depends on a number of variables and the individual’s financial circumstances.

A Chapter 7 case is sometimes described as an “erase your debts and start fresh bankruptcy.” The basic concept of a Chapter 7 case is that creditors receive whatever they are legally entitled to collect on the date the bankruptcy case is filed. Legal exemptions protect most or all of a Chapter 7 debtor’s property, so creditors generally receive nothing. Unpaid unsecured debts (e.g. credit cards, medical bills) are discharged at the end of a Chapter 7 case. The debtor must choose whether to continue paying for a secured item such as a car or house, or surrender the property and discharge the debt. A typical Chapter 7 bankruptcy case will take around four months, start to finish, and the debtor will not lose any property.

In a Chapter 13 case the debtor repays all or part of her debts in installments to creditors over three to five years. The repayment period cannot exceed five years. The debtor proposes a plan to repay creditors based on the debtor’s projected income. The plan is reviewed by creditors, who may file objections, and is approved or denied by the bankruptcy court. At the end of the repayment plan, many creditors who are not paid in full are discharged. The debtor does not lose property during a Chapter 13 bankruptcy, but must pay creditors an amount equal to what they would have received in a Chapter 7 case.

Some individuals choose to file Chapter 13 to have the opportunity to repay debts over time, like a vehicle or house payment. In some cases Chapter 13 can lower or eliminate these payments. In some rare cases individuals are disqualified from Chapter 7 because their household income allows them to pay a portion of their unsecured debts.

If you are unable to pay your creditors, discuss your options with an experienced bankruptcy attorney. The Bankruptcy Code is very flexible and efficient at reducing, restructuring, and even eliminating debts you can’t afford to pay. The bankruptcy chapters allow you and your attorney to make decisions that can lead to a better financial future for you and your family.
 

 The U.S. Treasury Department has developed an online calculator to assist homeowners in determining eligibility for assistance under the federal Home Affordable Modification Program. HAMP is a federally funded program that defines the process for borrowers who are in default, at risk of imminent default, or in foreclosure to modify their home mortgage to a more affordable monthly payment targeted at 31 percent of their monthly gross income. The HAMP calculator, found at CheckMyNPV.com, is designed to calculate the net present value (NPV) of their mortgage, and can be used by homeowners prior to applying for a HAMP modification with their lender. The NPV is a formula used to determine your eligibility for a loan modification under the HAMP Program. The Treasury Department cautions that the calculator “provides only an estimate of a servicer's NPV evaluation and is intended for use only as a guide.”

Unveiling the calculator at CheckMyNPV.com is the latest move to streamline the HAMP process. It comes on the heels of an announcement by the Treasury Department to require that servicers designate a single point-of-contact through the entire default resolution process.

If you are behind on your mortgage payments, or can’t afford your current mortgage payment, you have options! In addition to the federal bankruptcy laws, HAMP is one of several government programs that are available to homeowners in distress. In some cases, bankruptcy can provide time for the homeowner to negotiate lower payments with the lender, repay mortgage arrears, or even strip away a second or third mortgage loan.

The housing bubble has burst, but that doesn’t mean the fallout must rain down all over you and your family. Protect your home by taking advantage of the legal processes in place to refinance, modify, or discharge your home debt. Speak with an experienced bankruptcy attorney and discuss your legal options.

Recently the State of Minnesota sued one of the largest collection agencies in the U.S. alleging the company used false and unreliable mass-produced affidavits as proof in consumer debts lawsuits. The suit was filed by the Minnesota Attorney General and states that Midland Funding, LLC and Midland Credit Management “aggressively filed thousands of lawsuits against individual citizens for collection of old, purchased debt, often supporting those lawsuits with 'robo-signed' affidavits.” The Minnesota lawsuit seeks an injunction to stop the fraudulent practice, and $25,000 in fines per occurrence. The Midland companies named in the lawsuit are subsidiaries of San Diego based Encore Capital Group, Inc., a publicly traded company. Reuters reports that “through year-end, [Encore] had invested about $1.76 billion to buy 33 million accounts with a face value of $54.7 billion, or about 3 cents on the dollar.”

Minnesota Attorney General Lori Swanson stated in the complaint that Midland workers signed up to 400 affidavits a day without reading them. Business affidavits are often the only evidence used against an individual in a collection case. Earlier this year the federal government issued sanctions against 14 banking organizations for robo-signing documents used in the foreclosure process, citing a serious “pattern of misconduct and negligence.” These unreliable and often false affidavits can pervert the judicial process, in some cases causing judgments for money not owed or a foreclosure by a bank that does not hold the mortgage note.

If you are facing a lawsuit or foreclosure, speak to an experienced bankruptcy attorney and discuss your options. In some cases you may have a non-bankruptcy legal defense or the opportunity to resolve the debt without further litigation. Additionally, the bankruptcy process may be able to save your home or discharge a large collection account. Do not be the victim of the fraudulent practices of banks and collection agencies. Learn your legal rights and protect your property, income, and peace of mind!

 Joseph P. Kennedy, Sr., patriarch of the Kennedy clan, was fond of saying, “When the going gets tough, the tough get going.” If you are struggling with overwhelming debt, the kind that keeps getting tougher and tougher, isn’t it time to “get tough” and “get going” on solving your financial problems?

Taking control of financial trouble is always good advice, and bankruptcy can be a useful tool in managing debt. Last year over 1.5 million individuals took control and filed bankruptcy, according to the National Bankruptcy Research Center. In fact, a recent survey concluded that one in eight American adults has either filed or contemplated filing for bankruptcy. Findlaw.com, an internet legal site, conducted this telephone survey of 1,000 adults and found that 13% of the responses have considered bankruptcy to remedy their financial difficulties.

When you file a bankruptcy case, you shift the balance of power from creditors and bill collectors to your side. The federal bankruptcy laws stop collection activity dead in its tracks. While your bankruptcy case is pending creditors are prohibited by the federal law from taking any collection action against you, including harassing telephone calls or any legal action. Bankruptcy is an opportunity to reorganize your finances by eliminating debt, or repaying some or all of your debts over three to five years.

Bankruptcy is not only the end of many financial troubles, it is also a new beginning. Attorneys refer to the bankruptcy process as a “fresh start,” and it can mean a second chance at living your life without the suffocating pressures of debt. Many debtors are able to quickly rebuild their credit, and often qualify for competitive rate home and auto loans within two or three years after the bankruptcy discharge.

Don’t let debt be your master. Speak with an experienced bankruptcy attorney and take control over your finances. A “fresh start” bankruptcy discharge may be the legal remedy you need to shape a better financial future for your family.

 Most debts are included in a Chapter 7 bankruptcy discharge. Not only are unsecured debts like medical bills and credit cards included, but secured debts like your vehicle loan and home mortgage are also part of the Chapter 7 discharge. The Chapter 7 bankruptcy discharge eliminates your personal obligation to pay a creditor, but does not generally strip away a secured creditor’s right to collect against the loan collateral. In plain English, a secured creditor must be paid or the property securing the debt must be returned.

Many times Chapter 7 debtors want to keep property used as collateral for a loan and opt to execute a bankruptcy reaffirmation agreement. The reaffirmation agreement is a new contract between the Chapter 7 debtor and the secured creditor in which the debtor agrees to continue paying a dischargeable debt (such as an auto loan) after the bankruptcy. The secured creditor agrees to not repossess the property. Reaffirmation agreements are only available to Chapter 7 debtors.

To reaffirm a debt the agreement must be filed with the bankruptcy court before the bankruptcy discharge is entered. The Bankruptcy Code requires that the debtor file a statement of current income and expenses that demonstrates the debtor’s ability to afford the terms of the reaffirmation agreement without creating an undue hardship for the debtor or the debtor’s family. It is important to carefully consider whether a reaffirmation agreement is right for your family. Reaffirming a debt means that the debtor remains personally liable for any subsequent default on the loan, and can be sued or have the property repossessed. When it is clear that there is not enough income to afford the debt, the bankruptcy court may not approve the agreement.

A reaffirmation agreement is a new contract and the parties are able to change the terms of the original agreement. This can mean a lower interest rate or a longer payment term to make the monthly payments more affordable. Creditors are sometimes agreeable to these changes because the alternative is a costly repossession.

Filing Chapter 7 bankruptcy does not mean that you will lose your car, house or other property. Most bankruptcy debtors keep all of their property. A reaffirmation agreement is just one way Chapter 7 debtors can keep property during bankruptcy. An experienced bankruptcy attorney can explain the legal options for discharging your debts and retaining your property.

 Many individuals report that filing bankruptcy was the best choice they ever made. The Bankruptcy Code provides powerful relief for those buried in debt. Let’s look at the top five provisions in the Bankruptcy Code

Number 5: Redemption/Cram-Down of a Vehicle
A Chapter 7 debtor may redeem a personal vehicle by paying the fair market value of the vehicle, and discharge the remaining vehicle debt. While the redemption process requires a lump sum payment, there are several companies that offer redemption loans. Additionally, Chapter 13 debtors may “cram down” a vehicle loan to the value of the vehicle. The crammed-down debt is then paid off during the Chapter 13 repayment period. While there are restrictions for both the Chapter 7 redemption and Chapter 13 cram-down processes, many debtors are able to take advantage of these powerful provisions and save thousands of dollars.

Number 4: Lien Stripping a Second Mortgage
Lien stripping a junior mortgage during Chapter 13 bankruptcy has become a very popular option for underwater homeowners. Lien stripping is authorized when the value of the home is less than the amount of the senior mortgage(s). For instance, if your home is worth $200,000 and the amount of the first mortgage is $210,000, any junior mortgage can be stripped off in Chapter 13 bankruptcy. The stripped off debt is now considered unsecured and receives the same treatment as your other unsecured creditors.

Number 3: Chapter 13 (or 11) Repayment Plan
The Chapter 13 repayment plan provides time to pay creditors over three to five years. Most Chapter 13 debtors pay little or nothing to unsecured creditors (e.g. credit cards or medical bills), while paying off mortgage arrears, vehicle payments, taxes, and other secured or nondischargeable debts. The Chapter 13 repayment plan is way to restructure your finances under the supervision and protection of the federal bankruptcy court.

Number 2: Automatic Stay / Co-Debtor Stay
The automatic stay is one of the most powerful and far-reaching provisions in the American legal system. The filing of a bankruptcy case triggers this federal legal protection that automatically stops all legal processes and collection actions. State and federal lawsuits must stop, garnishments must stop, repossessions and foreclosures must stop. This stay is an opportunity for the bankruptcy debtor to reorganize finances without the pressures of creditor collections. Non-filing co-debtors are also protected during a Chapter 13 bankruptcy which may last up to five years.

Number One: Bankruptcy Discharge
The bankruptcy discharge is a federal court order prohibiting the collection of pre-bankruptcy debts. Discharged debts are no longer legally enforceable against the debtor. The bankruptcy discharge is the foundation of bankruptcy’s “fresh start.” The discharged debtor can begin the rebuilding process free from the pressures of overwhelming debt. The bankruptcy discharge is permanent and never expires.

Bankruptcy offers many powerful protections tools to reshape your finances. Get the facts today from an experienced attorney and learn how bankruptcy can help your family build a better financial future.

 The bankruptcy discharge is an extremely powerful court injunction that prohibits creditors and collectors from attempting to collect on a discharged debt. So what is included in your Chapter 7 discharge? The typical answer is “all debts incurred prior to the bankruptcy that are not excepted from discharge,” but that answer does not really explain what debts are included in the discharge. Let’s take a look at some categories of debts and how these debts are affected by the Chapter 7 discharge:

Unsecured debts are the easiest type to discharge during a Chapter 7 bankruptcy. Unsecured debts are not backed by collateral and include signature loans, credit cards, payday loans, medical bills, utility bills, old cell phone bills, and deficiency balances from repossessed cars and foreclosed homes. Identify all of your unsecured creditors during your bankruptcy case to ensure that all of your unsecured debts are discharged.

Secured debts are also discharged during Chapter 7 bankruptcy. Common secured debts are auto loans, mortgages, and personal loans backed by collateral. While a secured debt may be discharged by the Chapter 7 case, the secured creditor may still repossess the collateral. The general rule is that secured items must be either paid or the collateral surrendered back to the secured creditor. The most common method to keep secured property is to execute a reaffirmation agreement during the bankruptcy case. In this agreement, you keep the property and remain obligated to pay the monthly bill, and the creditor agrees to not repossess the collateral. If you do not desire to keep the collateral, you may surrender the property back to the creditor and discharge the debt.

The Bankruptcy Code lists 19 categories of special status debts that are automatically excepted from the bankruptcy discharge. Some of the more common of these debts are:
• certain tax debts
• debts not identified in the bankruptcy
• alimony, maintenance, or child support
• debts for willful and malicious injury to a person or property
• government fines and penalties
• student loans
• debts caused by DWI
In some cases the debts in the above categories can be discharged. If you have a special status debt, be sure to discuss your options with your bankruptcy attorney. Additionally, a debt may be excepted from the bankruptcy discharge if the creditor can show that the debt was incurred by fraud. A creditor is required to make the fraud complaint to the court within a certain time or the debt will be discharged.

A Chapter 7 bankruptcy discharge is a powerful legal tool that provides a financial fresh start. It is important to discuss the details of the bankruptcy discharge with your attorney before you file your bankruptcy to ensure that you understand how the Chapter 7 discharge will affect all of your debts. While most debts are discharged at the end of the Chapter 7 case, knowing which survive will allow you to plan your financial future.

 An individual can become confused by certain terms used during a bankruptcy case. Today’s article will help explain some of these confusing terms in plain language:

Bankruptcy Estate – consists of all of the debtor’s legal or equitable interests in property at the time the bankruptcy case is filed.

Means Test –a calculation of the debtor’s income and expenses to determine the ability to pay creditors. A debtor who fails the Means Test is presumptively disqualified from filing a Chapter 7 bankruptcy case and must file either under Chapter 13 or 11. Sometimes passing the Means Test is a matter of a few simple adjustments.

No-Asset Case - a Chapter 7 case where there are no assets or funds to pay unsecured creditors

Nondischargeable Debt –a debt that is not included in the bankruptcy discharge, usually a type of debt identified by law (e.g. child support, certain taxes, etc.)

Petition –refers to the papers filed with the court that commences the bankruptcy case. The date the bankruptcy was filed is often called the Petition Date.

Pre-Petition / Post-Petition – identifies the time of a bankruptcy-related activity. For instance, a debt that was incurred prior to the bankruptcy filing date is a “pre-petition” debt. Income earned after the date of the bankruptcy filing is called “post-petition” income.

Preference –a debt that was paid prior to the bankruptcy when the debtor was insolvent and unable to pay other creditors. Preference payments should be avoided. Discuss any pre-bankruptcy payments with your attorney.

Proof of claim – the creditor’s claim and verification of a debt filed during a Chapter 11, 13, or Chapter 7 asset case.

Secured Debt - a secured debt is backed by a mortgage, pledge of collateral, or other lien. If the debt is not paid, the debtor has a right to collect against specific property. For instance, a car loan may pledge the car as collateral for the loan. If the borrower fails to make the payments, the lender can repossess the car. Common secured debts are auto loans, mortgages, and personal loans secured by household items.

Trustee – the individual assigned to administer the bankruptcy case. Usually an accountant or attorney, the trustee is not the bankruptcy judge.

Unsecured Debt – an unsecured debt is not secured by property. A signature loan, most credit cards, and medical bills are common types of unsecured debts.

 A common question from clients preparing to file bankruptcy is, “Do I have to list it?” “It” can be an item of property, a financial obligation, a source of income, or even a reoccurring bill. The simple answer is, “Yes!” You must list all of your assets, debts, income and expenses. The bankruptcy process expects and relies on honest disclosures from the debtor. These financial disclosures are made under oath and threat of perjury. You must disclose everything.

Disclosing ownership of an asset doesn’t mean you will lose that property. Statistically, only four percent of all Chapter 7 bankruptcy cases have an asset that is turned over to the trustee. Federal and/or state exemption laws protect most property during bankruptcy, however property exemptions are only recognized when the asset is listed and the legal exemption is properly claimed. An asset that is concealed during your bankruptcy case will not receive the full protection of the exemption laws.

Likewise, disclosing income does not mean that you will be forced into a Chapter 13 repayment case. Most debtors pass the means test without much effort. In the remaining cases, most only require small adjustments. Disclose all of your income early during the bankruptcy process, and your attorney can discuss your legal options for discharging unsecured obligations without filing a Chapter 13 repayment case.

Intentionally failing to disclose a debt means that the debt is not discharged. Unfortunately, it also means that you have committed perjury since you attested to having listed all of your debts. Perjury is a federal crime, and you may be denied a discharge. Occasionally a debtor wants to omit a creditor from the bankruptcy case. Your attorney can help you with this decision. For instance, a credit card with a zero balance is not a debt and there is no disclosure requirement. In theory, since the credit card company is not listed as a creditor, it does not receive notice of the bankruptcy, and the credit relationship is not disturbed. Realistically, the credit card company will discover the bankruptcy independently and may restrict the account.

When it comes to bankruptcy it is important to be completely honest with your attorney. Your attorney can advise you on making the best disclosure decisions while staying within the legal requirements of the bankruptcy laws. Don’t hide a financial fact! Discuss it with your attorney and protect your legal rights.

 Certain debts have been given special status by the Bankruptcy Code and are generally excluded from the debtor’s bankruptcy discharge. Child support obligations, student loans, and income tax debts are three of the most common types of debts that are not dischargeable. However, each of these debts may be eligible for discharge in bankruptcy under certain circumstances.

The rules for discharging an income tax debt can be complicated, and the debtor’s ability to discharge all or a portion of the tax debt or penalties may depend on whether the case is filed under Chapter 7 or Chapter 13 of the Bankruptcy Code. An income tax debt arises from a tax return for a particular tax year. In general, an income tax debt for a particular tax year may be discharged if the following criteria are met:

1. The due date for filing the tax return was at least three years prior to the bankruptcy filing date. This due date includes any extensions.

2. The tax return was filed at least two years prior to the bankruptcy filing. This date is the time the return was actually filed with the IRS.

3. A tax assessment was made at least 240 days prior to the bankruptcy filing. The tax assessment is usually measured from the IRS proposed assessment sent to the taxpayer.

4. The tax return was not fraudulent, and the taxpayer has not attempted to evade the tax laws. Dishonest taxpayers do not receive the benefits of the bankruptcy laws.

Taxes that do not meet the above criteria are not included in the bankruptcy discharge. This includes income tax debts from unfilled tax returns. Even if the IRS assessed a tax many years ago, if the taxpayer failed to file a return, the debt is not dischargeable.

When an income tax debt is discharged in bankruptcy, any tax penalty is also discharged. However, in some cases the tax penalty may be discharged, even when the tax debt itself is not discharged. For instance, in a Chapter 7 case tax penalties are discharged if the penalty is associated with a tax debt more than three years old. In a Chapter 13 case all unsecured tax penalties are dischargeable, and receive the same treatment as all other unsecured debts during the term of the bankruptcy repayment plan. If the debtor is repaying a tax debt through the Chapter 13 bankruptcy case, no new tax penalties will accrue.

The federal bankruptcy laws contain specific provisions for discharging income tax debt. Bankruptcy can provide you with time to repay your obligation, without the threat of IRS seizure or garnishment; or, in some circumstances, can permanently discharge your tax debt. Your bankruptcy attorney can explain your legal rights and the available opportunities to free yourself from your income tax burden.

 Individuals struggling with financial difficulty experience many forms of debt-related stress. Harassing phone calls, embarrassing collection letters, lawsuits, garnishments, foreclosure, repossession . . . financial distress can become a personal nightmare! Fortunately, there are federal laws that can help. A bankruptcy debtor receives several powerful legal protections during the course of a bankruptcy case that provide instant relief.

When an individual hires a bankruptcy attorney, the federal Fair Debtor Collection Practices Act (FDCPA) prohibits third party collectors from contacting the individual directly and must direct all communications to the attorney. The FDCPA provides immediate relief from collector harassment while preparing to file a bankruptcy case. This law applies to all third party collectors, such as collection agencies or attorneys, but does not prevent an original creditor from attempting to collect. While the FDCPA does not prevent a lawsuit, repossession, or foreclosure, the involvement of a bankruptcy attorney may delay these processes.

Debtors receive additional relief once the bankruptcy case is filed. The bankruptcy “automatic stay” becomes effective as soon as the case is filed. This stay is a temporary injunction automatically issued by the federal bankruptcy judge and prohibits all collection activity (with a few very narrow exceptions). The automatic stay is effective throughout the duration of the bankruptcy case, but can be modified or terminated by the court after a hearing. This powerful protection stops all creditors and collectors dead in their tracks, and stays court processes such as a lawsuit, garnishment, repossession, or foreclosure.

At the conclusion of nearly all consumer bankruptcy cases the court will issue a permanent injunction prohibiting creditors from collecting on pre-bankruptcy debts. This injunction is known as the “bankruptcy discharge” and relieves the debtor’s legal obligation to pay the creditor. The discharged creditor may not take any collection action against the debtor, which includes contact by phone or mail.

If you are experiencing creditor harassment, speak with an experienced bankruptcy attorney and learn how the federal bankruptcy laws can provide immediate relief. Your attorney can help restructure your finances to shape a better financial future. Call today and get the help you need.

 Modern bankruptcy laws permit the debtor to keep certain property necessary to maintain a modest standard of living. These laws, called exemptions, protect property from collectors so that the debtor has a reasonable chance at a fresh financial start after bankruptcy. However, while these protections afford the honest debtor a fresh start, some individuals try to get a head start by transferring property in an attempt to hide it from the bankruptcy process. As you can guess, concealing assets from the federal bankruptcy court is a bad idea.

Section 548 of the Bankruptcy Code endows the bankruptcy court trustee with the power to undo a fraudulent transfer made within two years of the bankruptcy filing. Fraudulent transfers include any transfer made with the intent to hinder, delay, or defraud creditors; or transfers made while the debtor is insolvent which do not involve a fair value exchange. While the lookback period is set at two years by section 548, another section of the Bankruptcy Code (section 544) permits the trustee to apply state law to undo a fraudulent transfer. In many cases the state law lookback period is longer than two years.

There is generally no issue if you have sold property and received a fair price. However, if you have transferred property in a less than honest fashion, the transfer may be undone. For instance, if you sell your car worth $5,000 to your brother for $500, and then file bankruptcy two months later, the trustee may seize the car from your brother and sell it to pay your creditors. Likewise, deeding jointly owned real estate to a non-filing spouse prior to filing bankruptcy can create a thorny legal dilemma.

Every individual bankruptcy case must include a Statement of Financial Affairs which asks the debtor to list all property transferred within two years before the bankruptcy filing. It is important to answer this question honestly, and to discuss any recent property transfer with your bankruptcy attorney.

If you are considering bankruptcy, consult with an experienced bankruptcy attorney and discuss your legal exemptions. In many cases your attorney can legally protect your property without the need to sell or transfer. Your attorney can advise you on the best course of action to protect your property and restructure your financial obligations.