Selling your car to your husband before filing for bankruptcy is allowed if the car is sold at fair market value. The rule is necessary to keep people from transferring ownership of valuable assets they could lose in bankruptcy. The bankruptcy court will review transactions dating back two years if it suspects you have been giving away or selling assets at below market rates while preparing to file for bankruptcy.
Fraud
Felony bankruptcy fraud charges are possible for widespread transferring of assets, although selling a car to your husband is unlikely to result in a charge. The bankruptcy court is serious about maintaining the integrity of the process, and it can file a lawsuit to void the sale of the car to your husband if the car was sold below market value.
341 Meeting
Bankruptcy trustees review your list of debts and assets during a conference called the 341 meeting, which is also known as a meeting of the creditors. Creditors listed in your bankruptcy are allowed to attend to ask questions about your debts and assets. The trustee leads the discussion and tape records your answers. Inconsistencies in your statements about assets could trigger an investigation by the trustee.
Legal Advice
You may file for bankruptcy with or without an attorney. Experienced, reputable attorneys are valuable, because they help avoid mistakes. A good attorney will thoroughly question you about your assets and review rules against transferring assets.
Exemptions
The attorney can also advise you about exemptions that allow consumers to keep many assets in bankruptcy, including automobiles. Contact several bankruptcy attorneys before filing if you have concerns. Initial consultations are usually free, and interviewing two or three attorneys allows you to ask many questions.
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