What you did last year may come back to bite your family when you file bankruptcy.
Even if not fatal, the bite can leave scars.
I sat waiting for my turn at a bankruptcy hearing last week and watched a series of other cases that left blood in the water.
The trustee’s feeding frenzy in at least three cases centered on payments or transfers the debtor made to family before they filed their bankruptcy case.
In some cases, the debtor was repaying money lent by family. In others, it appeared the debtor had simply made a gift to family.
In the worst case, it looked like the debtor had transferred a car to keep it out of the bankruptcy.
All of those transfers spelled trouble
In each case I watched, the Chapter 7 trustee continued the hearing for the production of documents, the amendment of schedules, or further questioning.
In several, she wanted the debtor to agree to give her a longer period to challenge their very right to a bankruptcy discharge
None of this bodes well for the debtor.
The long arm of the law
Bankruptcy law gives the trustee legal rights to recover, for the benefit of creditors, property or money the debtor has transferred. Collectively, those are the avoiding powers.