One of the questions that everyone filing bankruptcy has to answer is whether they've transferred any property in the two years before filing their case. “Transferring property” could mean you sold it, gave it away, or otherwise got rid of it. The bankruptcy court and trustee want to ensure you didn’t transfer property to avoid having it liquidated and sold in your bankruptcy. That’s why your bankruptcy forms ask this question. This doesn’t apply if you're in the business of selling items.
What Are Some Common Examples of Transfers?
Cars: If your name was on a car title in the last two years, but it isn’t any longer, you’ll have to give the court information about this transfer. This is true whether you sold the car for money or took your name off the title for a car you don’t consider your own.
Items you had around the house: If you sold something on Craigslist, eBay, OfferUp, or just to your neighbor next door, list it. If you had a yard sale where you sold a whole bunch of stuff, list it. Since it can be tedious to keep track of every single item you sold at a yard sale, just let the court know that you sold miscellaneous household goods and estimate the total amount you received. If you sold anything for more than $100 at the yard sale, list it separately.
Bank accounts: If your name used to be on a bank account — like a joint account with your parent or child — and you took your name off the account, you’ll need to list the account. While it may not be a "transfer" in the traditional sense of the word because you never deposited any money into the account in the first place, it's still important to disclose this.
Transfers due to divorce: If you transferred property to your ex-spouse because your divorce decree told you to, that's a transfer that has to be listed.
How Do I Know When To List Something?
Here are some questions you can ask yourself that may help you figure out whether something is a transfer that needs to be listed:
- Did you use to have something that pretty much everyone has, but now you no longer have it? For example, if your bankruptcy forms show that you don't have any furniture, the trustee is going to look at your Statement of Financial Affairs. Assuming the reason why is listed here (perhaps it was sold at a yard sale or went to your ex in a divorce), this will make sense for the trustee. But if you leave the question about transfers blank, the trustee may think you're trying to hide something.
- Did you sell something to get money to make ends meet over the last two years? It can be hard to remember every detail of your life for the last two years. But think of items you may have sold to help get by when funds were low. You can check your bank statements for odd deposits that don't coincide with your payday to jog your memory and to get the exact amount of the transfer.
- Did you sign paperwork in the last two years to deal with certain property? Chances are if you needed to sign documents, a transfer of some kind happened.
If you’re not sure if something counts as a transfer or not, your safest bet is to list it. The worst thing that can happen in this case is that you list something that wasn't actually a transfer. But the worst-case scenario, if you leave out a transfer, is that the trustee thinks you're hiding something.