Your financial activity prior to filing for bankruptcy protection may come under scrutiny with regard to payments made to certain creditors or the transfer of property.
The clawback provision in bankruptcy allows a trustee to void transactions that are deemed preferential to certain creditors or recent transfers of property out of your name for the benefit of recovering that money and property for all of your unsecured creditors.
In general, payments or transfers made within 90 days of bankruptcy will raise a red flag. If in the 90 days preceding your bankruptcy, you transferred money or property worth over $600 in aggregate to one of your creditors while presumably insolvent, the trustee may void the transaction.
Keep in mind, however, that if the transfer or payment was made to insiders such as friends, family, or business partners, the transfer may be considered preferential up to one year prior to your bankruptcy filing date.
Fraudulent transfers of property include those that are made with the intent to hide assets or the sale of property for less than fair market value. The trustee may have grounds to void a transfer or recover property if it occurred within the two years of your bankruptcy if he or she finds that you intentionally committed fraud or you received less than fair market value while insolvent or if the transaction resulted in your becoming insolvent.
If you have questions regarding chapter 7 or chapter 13 bankruptcy, contact the Peoria Illinois Law Offices of Charles E. Covey for help. Charles works closely with each of his clients, taking the time to listen, answer any questions they may have and explain their options regarding bankruptcy protection as a strategy toward financial health.