Selling Assets When Considering Bankruptcy
When looking into different options to get out from under a pile of debt there are some things that need to be considered. Selling assets, returning assets to creditor’s, and bankruptcy are some of the ways that this may be accomplished.
If considering selling assets and possibly bankruptcy, there are some important things to know. When meeting with a bankruptcy attorney they will most likely ask about assets in a debtor’s possession, any payments they’ve made to creditors, and if they have sold any assets recently. The reason the attorney will ask about any assets sold recently is because the bankruptcy trustee will look into any sales made by the debtor before filing bankruptcy. The trustee is looking for any proceeds from the sales and where the proceeds went.
The trustee wants to see if un-exempt property was sold to avoid it being liquidated, or to see if creditors were paid with the proceeds. If the property was sold to avoid liquidation the trustee may seize the money to pay back creditors. If the proceeds were used to pay a creditor, that could also be considered favoring one creditor over another. In this case the trustee will probably try to recover the money from the creditor and divide it among all the creditors. If proceeds were from un-exempt property, and then used to purchase exempt property, the trustee will probably not allow the exemption for the newly purchased property.
The attorney’s job is to show that proceeds from any sales were used properly and not to defraud creditors. Many times the trustee will allow payments if the proceeds were used for non-dischargeable debts such as; student loans, child support, or alimony.
As Virtual Bankruptcy Assistants, when preparing bankruptcy petitions for attorneys it’s important that we know what to look for, and what questions to ask. If we can alert the attorney, we are working for, to possible problems with sales of assets, our services will bring a lot of value to the attorney. Any extra value that we bring will end up helping our businesses and keep our relationship going with the attorneys. Being educated on all the ins and outs of bankruptcy will allow us to deliver a thorough and correct bankruptcy petition to the attorneys that we partner with.