Bankruptcy laws allow debtors to protect and keep certain property from creditors so that the debtor has a better chance at a fresh start after filing bankruptcy. These bankruptcy laws are called exemptions. Many people, however, do not understand these bankruptcy exemptions and transfer or attempt to hide property prior to filing bankruptcy. Transferring or concealing assets from the bankruptcy court is never a good idea.
The bankruptcy court trustee has the power to reverse or undo a fraudulent transfer of property within the 2 years prior to filing bankruptcy. This can also include selling or transferring property for anything less than fair market value in an attempt to hide the property.
When filing a bankruptcy case, every individual filer must complete a Statement of Financial Affairs in which all property transferred within the two years prior to filing bankruptcy must be listed. When considering filing bankruptcy, always consult with an attorney so that your attorney can advise you how to legally protect your property without selling or transferring property prior to filing.