When burdened by debt, individuals often consider the sale of assets as a primary recourse. However, should asset liquidation prove insufficient, the difficult decision to declare bankruptcy may be necessary. It’s important to note that such actions can adversely influence the outcome of a subsequent bankruptcy case. For those contemplating bankruptcy after having sold assets, it’s in your best interest to connect with our experienced Rapid City Bankruptcy Lawyers before pursuing a filing.
Should I Sell Assets Before Filing for Bankruptcy in SD?
Although no law explicitly prohibits selling assets prior to filing for bankruptcy, such actions may be viewed unfavorably during the proceedings. In certain instances, this could preclude the discharge of debts or, in more severe cases, lead to criminal charges of fraud.
It’s advisable to prioritize the sale of exempt assets when liquidating holdings, as these assets are protected from creditor claims, unlike nonexempt assets, which are subject to liquidation. The sale of luxury goods, such as a designer bag, to satisfy a debt could be held against you by the bankruptcy court, as such a transaction could be interpreted as a preference for one creditor over others or as an intentional effort to deprive creditors of assets.
Conversely, the sale of assets like a vehicle to cover essential expenses such as rent or groceries is generally permissible. In such instances, it’s imperative to maintain meticulous records of all transactions, including sales and documentation of purchases made with the generated funds. It’s crucial to sell assets for their fair market value and for a legitimate reason.
Any attempt to conceal assets from creditors constitutes bankruptcy fraud and can result in severe consequences. It should be noted that the trustee has the authority to review your financial transactions for a certain period before you file. This is commonly known as the “look-back period.” The bankruptcy trustee will be less likely to question a pre-bankruptcy sale if you can demonstrate it was for a legitimate transaction.
What Should I Do if I’ve Already Sold Assets?
Selling assets prior to filing for bankruptcy necessitates disclosure to the bankruptcy court. All asset transfers conducted within the two years preceding the filing must be meticulously documented. Concealing or misrepresenting such sales constitutes a grave offense, potentially leading to the denial of debt discharge and, in severe cases, criminal charges. The court will scrutinize these transactions based on various factors. A qualified attorney can examine the specifics of your asset sales, assess any potential adverse impact on your case, offer guidance on the best course of action, and expertly guide you through the complex process.
For more information, please don’t hesitate to contact an attorney at 605 Bankruptcy.
