Can you sell off your own assets during bankruptcy?

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Question:

Can you sell off your own assets during bankruptcy?

Answer:

Assets are one of the most important aspects of filing bankruptcy. Assets are any type of real property you own, including real estate, household belongings and even the cash you have in the bank. In many instances, you can protect these assets through bankruptcy exemptions. In other circumstances, you could lose these assets if it is above the exemption limit. Some people are tempted to sell assets instead of allowing the court to do so.

Why Not To Sell Assets

The job of the bankruptcy trustee, who is assigned to your case when you file bankruptcy, is to ensure that all assets that are not protected are sold and the funds from the sale are used to repay creditors. The trustee is working towards liquidating anything possible to repay creditors. If you sell assets, one of the following could occur.

  • If the bankruptcy trustee does not find out, nothing will happen.
  • If the bankruptcy trustee does learn of the sale, the bankruptcy will be dismissed and you will be forced to repay the debt in full.
  • If the bankruptcy trustee learns of the sale of property, you could also be charged with fraud.

Keep in mind that the trustee could learn of the property through creditor’s records, complaints filed against you or from your financial records.

Hiring an Attorney

Rather than taking the risk and trying to hide assets or sell assets during bankruptcy, use a bankruptcy attorney to help you to protect as many of these assets as is possible to do so. 

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