QUESTION
Is it possible to sell my house before filling bankruptcy? Or will this create a bad situation with the future trustee?
Asked on Apr 28th, 2013 on Bankruptcy - Florida
More details to this question:
I have not yet filed bankruptcy, but will within the year. I have a house that I have lived in for about 14 years that I need to sell. I will receive some money from the sale, but most of it had planned to use to pay private creditors - like family members that have helped me with my house related payments and expenses. If I do this a pay the creditors I want to pay (private rather than credit card companies) and file bankruptcy after all of this is done.
14 ANSWERS
What you have just described is fraud and would open a huge can of worms resulting in lawsuits by the trustee against everyone you paid money back.
Answered on May 08th, 2013 at 1:25 AM
Bankruptcy Attorney serving Phoenix, AZ
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Law Office of D. L. Drain, P.A.
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Your questions are far too complicated to answer without more information. These answers also involve your state law.
Answered on May 02nd, 2013 at 2:18 AM
Bankruptcy Attorney serving Hampton, VA
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Haven Law Group, P.C.
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You should probably file first and then sell. If you sell first, you will need to wait a full year to file the bankruptcy.
Answered on May 02nd, 2013 at 1:44 AM
bankruptcy Attorney serving Paul, ID
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Paul N. J. Ross Law, PLLC
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Your question is fraught with all sorts of pitfalls in bankruptcy. I suggest you visit with an attorney to properly address them all. But here are some general basics. Selling property within 4 years of a bankruptcy is not an issue as long as it sells for fair market value and you recovered the value. Otherwise the Trustee could recover the property and sell it properly for full value. You will have to account for all the money you received from the sale of the home. Be prepared to vouch for most of the dollars. Lastly, payment to creditors within 90 days can be undone if over a certain amount. This time frame increases to one year and the dollar amount decreases if it is an insider, like they are related, business partners, or even close friends. If you pay these types of individuals off with your income from the sale you will want to wait over a year, at least, before you can file bankruptcy.
Answered on May 01st, 2013 at 12:00 PM
The answer to your question is yes; however, there are a few things to keep in mind if you want to use the money as you have detailed. In your case if you were to sell the house and then distribute the money to family as payment for borrowed money and then file bankruptcy the trustee (your case administrator) would then be able to sue them for the money you gave to your family. This is because this type of transaction is called a preference and it fully within the trustee's power to recover money in a preferential transaction (you are giving certain creditors more preferential treatment that others - a big no-no in bankruptcy where all creditors of a certain class must be treated equally).
Answered on May 01st, 2013 at 11:58 AM
Bankruptcy Attorney serving Livonia, MI
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Charles J. Schneider, P.C.
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This is a really bad idea! A chapter 7 trustee will pursue your "private creditors" for voidable preferences.
Answered on May 01st, 2013 at 11:58 AM
Bankruptcy Attorney serving Alpena, MI
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Carl C. Silver Attorney at Law
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You will need to wait at least one year after paying your friends and relatives off as these are preferential payments that the trustee would take away from all of your friends and relatives and you would get to pay them again since they are your friends and relatives.
Answered on May 01st, 2013 at 11:58 AM
Bankruptcy Attorney serving Overland Park, KS
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Wellman Law LLC
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You would probably not be pleased with the results of selling your house prior to filing Bankruptcy if your intention is to pay only certain creditors back. The payments you would make could be pursued by the Trustee as preferential payments that must be returned to the estate. It sounds as though you would definitely benefit from sitting down with an experienced Bankruptcy attorney to go over your situation and plan the best course of action.
Answered on May 01st, 2013 at 11:58 AM
Bankruptcy Attorney serving Walnut Creek, CA
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Alan E. Ramos Law Offices
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Any payments that you make to relatives within the one year prior to filing would be considered a "preference" and the trustee could demand the money back from your relatives. In some instances the period could be extended to 10 years.
Answered on May 01st, 2013 at 11:57 AM
Bankruptcy Attorney serving Huntington, NY
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The Law Office of Andrew M. Doktofsky, P.C.
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First, keep in mind that if you repay debts owed to "insiders", e.g. family members or friends, within the one year preceding a Chapter 7 bankruptcy filing, the bankruptcy trustee can bring an action to recover the money that was paid to those creditors. The bankruptcy code is designed to prevent exactly what you are proposing to do - that is repay your family members to the detriment of other creditors. With that in mind, the most important question is how much equity there is in your home. Depending on what county in New York that you reside in, your homestead exemption is between $75,000 and $150,000. If the house is jointly owned, e.g. with your spouse, then the exemption effectively doubles. If the equity in your home is within the homestead exemption limitations, you could file a Chapter 7 bankruptcy, protect your home, and then pay whomever you wish when you sell the house after the bankruptcy case is closed. Keep in mind that there are many other variables that will determine if you can file for a Chapter 7 bankruptcy. You should speak with an experienced bankruptcy attorney before taking any action.
Answered on May 01st, 2013 at 11:57 AM
Deborah F. Bowinski
Don't do it. If you repay creditors who are "insiders" and then file a bankruptcy case the bankruptcy trustee will have the ability and the duty to contact those folks you paid and get the funds back from them to redistribute in a more even and fair manner. You are required to disclose such payments in your court documents. You ate also required I disclose the sale of the property do the trustee will likely ask how the proceeds were used. Do yourself a big favor and retain an attorney to walk you through the bankruptcy process. It can be a minefield for the unwary and uninformed.
Answered on May 01st, 2013 at 11:56 AM
Chapter 13 Bankruptcy Attorney serving Bloomington, MN
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Gregory J. Wald
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Your plan is flawed. If you sell your home and use the money to pay relatives, the payments will be considered a "preference". The trustee of your bankruptcy case may demand that your relatives turn the funds over to the court so that they can be distributed evenly among all of your creditors. You might be better off to exempt the home in your bankruptcy if you are able and then sell the home after the bankruptcy is completed. You could then use the funds to pay whatever creditor you choose.
Answered on May 01st, 2013 at 11:55 AM
If it is over the exemption amount it could be a problem
Answered on May 01st, 2013 at 11:54 AM
Bankruptcy Attorney serving Plantation, FL
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Moffa & Breuer, PLLC
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File bankruptcy first. You and your family and friends COULD have a problem if you do it the other way.
Answered on May 01st, 2013 at 11:53 AM