Frequently, yes. As long as you sell your property for fair market value, there is usually no problem with selling an asset prior to filing your bankruptcy case in Chapter 7 or Chapter 13.
Get Professional Advice on How to Sell Assets
Problems arise in the bankruptcy context when one sells property for less than market value. Even with the best intentions, such a transaction is constructively fraudulent because you are effectively giving away some of your property which creditors could be pursuing in order to collect from you.
Typically, folks want to sell an old car or motorcycle or boat in order to pay ordinary bills coming due or to pay for their bankruptcy case. By doing some fairly simple pre-bankruptcy exemption planning, one can time their filing to achieve the biggest benefit possible in their financial situation. For instance, if you were to sell a boat for $5,000, it might be wise to spend that money down on expenses necessary for the maintenance of the household like a mortgage payment, dental work, new tires for your car, or your bankruptcy attorney fee. The key to a smooth bankruptcy case is disclosure. I typically advise clients to disclose these types of transactions on their petition in order to make their case easier for the trustee to administer, and to remove any doubt as to whether they are being honest.
It’s best to receive professional advice before selling property on the eve of bankruptcy. If you live in Western North Carolina, and are ready to figure out your bankruptcy options, I would be pleased to sit down with you in a free, initial bankruptcy consultation.
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