If you have very valuable property, bankruptcy may still be an option. Your lawyer can work with you to protect your assets in bankruptcy. You should be very careful who you select to represent and what steps you take, because a poorly executed asset protection plan may result in property loss or other sanctions.
A few of points to consider:
- File Bankruptcy at the Right Time: Generally asset protection takes time. The upshot is that you probably have more time to file bankruptcy than you think. If you need to protect valuable assets, your bankruptcy attorney can help you find the best time for your bankruptcy.
- Choose the Right Chapter. In a reorganization bankruptcy, such as a chapter 11 or 13, you can keep property if your plan will pay an amount that is equal to or greater than the non-exempt equity in the property. In a chapter 7, you must turn property over to the trustee upon his request.
- Make Sure You Use Accurate Property Values: You may think that something is worth a fortune, but a competent appraiser might have a more realistic number. In bankruptcy, you want your property to be worth as little as possible. If it turns out your property is worth less than you thought, then it will be easier to protect that asset. The key is to get an competent honest appraiser who will not be swayed by the fact that you are in bankruptcy.
- Never Try to Game the System. Some people think that they can protect property by selling it to a friend or relative for a deflated price, i.e. selling a Ferrari for $1.00. Or they think that they can make a gift of the property. These are called fraudulent transfers, and they create more problems than they solve. This exposes the recipient to a potential lawsuit. It also exposes you to an action to deny your discharge.
- Never Try to Hide Property or Property Transfers. The number one reason people lose their discharge, and in some cases face criminal prosecution, is they try to hide property or property transfers. The most important thing that you can do in a bankruptcy, but especially an asset protection bankruptcy, is be upfront and honest.
- Structuring Your Exemptions. Bankruptcy exemptions allow you to keep certain property. One way to protect assets is to maximize the value that you get from your exemptions and the structure of your exemptions.
Asset protection is one of the more difficult areas of bankruptcy law. You need to be sure that your lawyer knows how to get you the most value from the bankruptcy. You also need to be sure that your lawyer knows how protects you assets, without causing problems with the trustee or the court.
Contact the Law Office of David H. Fuller, a Seattle bankruptcy lawyer, for your free consultation.
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