QUESTION
Can I sell my stocks before filing bankruptcy?
Asked on Aug 17th, 2011 on Bankruptcy - Michigan
More details to this question:
If you have non retirement or IRA related stocks in an account, is it ok to sell them before filing bankruptcy? And use the proceeds to pay the attorney? and my next question is, how far back do you have to go in regards to stock trades you have made in the past? Is it 6 months, or some other figure? What if you have had profits and losses, do you report them like you would when filing taxes? You know the + and - or just record the profits? or what? This is so confusing.
11 ANSWERS
judith runyon
No.
Answered on Jun 09th, 2013 at 8:46 PM
2 Awards
It is alright to sell stocks before filing the bankruptcy. You will have to do a good accounting as to where the funds went. Paying the bankruptcy attorney and the filing fee will make sense to the trustee, buying something else may not.
Answered on Aug 21st, 2011 at 11:27 AM
Trusts and Estates Attorney serving Jacksonville, FL
Partner at
Law Office of David M. Goldman PLLC
3 Awards
Yes you can sell assets at fair market value to hire an attorney. There are many rules on how far back the court will look depending on the type of asset and type of transfer and whom it was transferred to. It can be up to 10 years, but generally it is only 1 year if family is involved and 6 months for other normal transfers.
Answered on Aug 20th, 2011 at 2:00 PM
You can certainly sell the stocks or any assets. You must simply get fair value for the asset and be able to explain where the funds were spent. An attorney to assist in the bankruptcy would be an appropriate expenditure. There is a two year disclosure requirement regarding transfers of assets and sale of assets in bankruptcy. As long it was not insider dealing and fair value was received, it is usually not an issue. Where the funds were spent may be an issue if it was frivolous or used to pay family members or insiders.
Answered on Aug 20th, 2011 at 1:34 PM
Bankruptcy Attorney serving Concord, CA
at
William Rubendall Attorney at Law
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You can sell stocks prior to bankruptcy but you must meet all the requirements of the bankruptcy law in doing so. It is probably unwise to do so and you should consult an attorney prior to making a decision. Transactions within one year prior to filing will be scrutinized by the trustee to see whether you violated preference rules. All income and expenses must be provided in your bankruptcy petition.
Answered on Aug 19th, 2011 at 2:16 PM
2 Awards
Yes, you can sell stocks and spend the money. Just keep a trail of where the funds were used so if the trustee asks you can show it. Ordinarily you don't have to show trades you made in the past. You simply have to disclose if you have a stock account, and if you sold assets within the last year you need to so state. For a stock account I'd recommend just disclosing a sale if you cashed out and closed the account.
Answered on Aug 19th, 2011 at 1:59 PM
Debtor's Rights Attorney serving Atlanta, GA
at
Theodore N. Stapleton, P.C.
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The answer is yes you can sell stocks you just need to make sure the proceeds are exempted from the bankruptcy estate so the trustee doesn't take them.
Answered on Aug 19th, 2011 at 12:41 PM
Daniel James Wilson
Danger! During pre-filing period you can do planning to turn non-exempt assets to exempt assets but be careful. The more time you can wait before filing the better. Amount of money involved is important too. Selling stocks to pay attorney fees and filing fee is OK. Your other question net profits from selling stock is probably income for means Test purposes. Means Test looks back six months.
Answered on Aug 19th, 2011 at 11:45 AM
Glen Edward Ashman
Since you indicate you have a lawyer, discuss specifics with your lawyer. It often (not always) is okay to sell assets to pay a lawyer. The attorney will help you determine what to sell and how and when is best.
Answered on Aug 19th, 2011 at 11:45 AM
Bankruptcy Attorney serving Livonia, MI
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Charles J. Schneider, P.C.
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As long as you do so for fair market value and can account as to where the proceeds go to. Paying your attorney with them is an excellent idea.
Answered on Aug 19th, 2011 at 11:26 AM
Bankruptcy Attorney serving Herndon, VA
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Maureen O'Malley
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I'm glad you're retaining an attorney. I suggest you hold those questions for him/her, when you can be better advised based on your particular circumstances.
Answered on Aug 19th, 2011 at 11:26 AM