September, 2021 | Tampa Bankruptcy Attorney

Will Bankruptcy Prevent Me From Selling My House

by LawGina | Sep 29, 2021 | Bankruptcy Tips

If you sell your homestead prior to filing your bankruptcy case, the trustee can look to see how that money was spent.

For example if two years ago you received $50,000 from proceeds from the sale of your house, how was that money spent?

Did you use the money on reasonable expenses? Did you pay back your creditors? Did you spend it frivolously? Did you incur debt at the same time or after receiving that money? Your case filing has to be in good faith where you didn’t incur debt with the intention of filing for bankruptcy.

You have to make an effort to pay off the debt but genuinely be unable to do so. Taking that example, if you took that $50,000 and gifted it to a family member the trustee could go after your family members for repayment of the $50,000 and use that money to pay your creditors.

If you took a vacation or spent the money frivolously instead of paying your creditors, the trustee would argue that you did not file the case in good faith and you would need to repay that money to the trustee. Generally, it’s better not to transfer property just prior to filing your bankruptcy case. Make sure any profits are accounted for from the sale. Keep receipts.

If there is a divorce order requiring that the property be sold, that is fine, but the money would still need to be accounted for. If you split the homestead profits with an ex, we would need to look too see if that person was also on the deed to the property and determine if they were entitled to 50% of the equity. If they have a 50% interest in the property but you give them 100% of the home sale proceeds without a divorce order that could be construed as a gift. The trustee could reverse the sale or go after your ex-spouse to receive your portion of the sale proceeds to pay your creditors.

If you are considering selling your home its best to wait until your bankruptcy case is concluded or you can potentially waive your homestead exemption by putting your property on the MLS or under contract. If you bankruptcy case is pending, you would need the court’s permission to sell the property. The trustee or any creditors could potentially object to you using the homestead exemption. Before deciding to transfer any property its always best to consult with your attorney prior to doing so.

Can I sell my car prior to filing bankruptcy?

by LawGina | Sep 17, 2021 | Bankruptcy Tips

A common question clients ask is whether they can sell or trade in their vehicle prior to filing bankruptcy. If using the Florida exemptions your allowed to have $1,000 in equity in your car. If you rent then you would have another $4,000 in exemptions to use on a car or you other personal property. For example, if the loan payoff on your car is $15,000 and the value of your car is $20,000, you would have $5,000 in equity in your vehicle. If you rent, you would owe nothing to the trustee (we could exempt all of the equity in the vehicle).

If you owned a home you would owe $4,000 to the trustee to keep your vehicle. People often ask why they would have to pay the trustee for a car that is paid off. The exemption amounts are a protection against people spending all of their money to accumulate assets then paying nothing back to their creditors when they file for bankruptcy.

The trustee will use Kelly blue book, private party value. We generally recommend obtaining a certified appraisal if you are over the exemption amount since Kelly blue book doesn’t account for a variety of factors such as the actual condition of the vehicle, mechanical issues or whether the vehicle has ever been involved in an accident. Many times once the vehicle is evaluated by an appraiser particularly if it’s an older vehicle with high mileage, the value will often be less than the Kelly blue book value.

If you trade in your car prior to filing bankruptcy you run the risk of having to pay back that amount to the trustee. For example if you received a $6,000 credit for trading in your current vehicle for a new one, the trustee could say you converted a non-exempt asset into an exempt asset so that amount of money would have to be paid to the trustee. All transfers of either personal property including cars or homes have a two year disclosure period. Under most circumstances, unless there is a reason to get rid of the vehicle, such as an immediate emergency mechanical issue, its best to just have your vehicle appraised and not sell it until your case is concluded to avoid such issues.

Will Bankruptcy Prevent Me From Selling My House

Can I sell my car prior to filing bankruptcy?

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