How Do Bankruptcy Trustees Find Out Where You Own Land?
If a debtor files for bankruptcy protection and has valuable assets that he would like to keep, such as a house, land, expensive cars and jewelry, then he should file for Chapter 13 bankruptcy. In a Chapter 13 case, a debtor may keep those assets so long as he pays for them over time. If a debtor files for Chapter 7 bankruptcy with such assets, he may have to give them up in order to have his debts discharged.
Other People Are Reading
-
Role of Trustee
-
After the debtor files the bankruptcy petition, a trustee is appointed to oversee the case. The trustee reviews the debtor's court filings and meets with the debtor at the first meeting of the creditors to discuss the debtor's assets and financial obligations.
First Meeting of Creditors
-
At the first meeting of creditors, a debtor needs to provide to the trustee documentation as to proof of current income, bank and deposit account statements, proof of actual expenses, deeds, titles to motor vehicles, tax returns, rent receipts, pay stubs, and real estate tax assessment documents. The trustee then questions the debtor, investigates the debtor's assets, the debtor's right to discharge of debt and the debtor's exemptions. Assets of the debtor that are nonexempt--meaning that they cannot be seized and sold to pay back debts--or have been abandoned are gathered by the trustee who sells them to raise money to be used to repay the debtor's debts.
-
Investigation
-
Because the trustee receives all of the debtor's financial records, the trustee can examine the documents for any transactions made in the past couple of years. The estate property that the trustee gathers is not limited to tangible property. It may also include a debtor's "acting upon rights." These may have resulted in assets being added to the estate through such means as filing of lawsuits.
Example
-
An example of situation in which a person seeks to shield assets from being revealed in a bankruptcy proceeding would be a debtor who takes a pay cut and consequently is unable to pay all of the bills she was previously paying. She is in arrears on her car payments and dodging the repossession man. She decides that she may need to file for bankruptcy protection. She owns undeveloped land but does not want to lose it in a bankruptcy proceeding, so she transfers the property to her mother for a fee of $50. Ten months later, She files for Chapter 7 bankruptcy. Even if the debtor does not list any land owned in the documents requested by the trustee or does not acknowledge that she owned any land during the creditor's meeting, the trustee can find that she has made a transfer of the land in order to defraud her creditors. The trustee will then take possession of the land, sell it, and use the proceeds to pay creditors if the trustee does not decide to ask that the debtor's case be dismissed because of the attempted fraud.
Fradulent Transfers
-
According to the U.S. Bankruptcy Code a trustee has authority to avoid any transfer of an interest of the debtor in property or any obligation incurred by the debtor that was made or incurred on or within two years before the date of the filing of the bankruptcy petition. This provision applies if the debtor voluntarily or involuntarily made the transfer to hinder, delay or defraud any entity to which the debtor was indebted or would become indebted. It also applies if the debtor received less than a reasonably equivalent value in exchange for the transfer or obligation and the debtor was unable to pay his debts at that time.
-
References
- Photo Credit Countryside land image by Rose from Fotolia.com
