by:
Wade Waldrip
on Wed Feb 25,2015 18:17:41
In a previous blog, I discussed the legal distinction between "exempt" and "non-exempt" property. In brief, exempt property cannot be seized or taken by most creditors, while non-exempt property can be seized by creditors and applied to the debt(s) owed them. Similarly, exempt property is beyond the reach of the bankruptcy trustee, while non-exempt property is subject to forfeiture to the trustee, who will sell the non-exempt assets and apply the resulting proceeds to the bankrupt's debts.
Someone who owns significant non-exempt property, yet has a great deal of debt, may fear that her creditors may seize her non-exempt assets or, in the event of a bankruptcy, that the bankruptcy trustee will do so. Is it legal to simply give the subject non-exempt assets to a friend or family member or, if not, to sell them for a nominal value to a friend? Common sense should suggest the answer.
It is not legal to give non-exempt property away, or to sell it for a drastically reduced price, in a calculated effort to thwart one's creditors or the bankruptcy trustee. Doing so is specifically prohibited under both state and federal law and may subject the offender to severe civil and criminal penalties.
If you are experiencing financial difficulties and have concerns about the legality of transferring assets, it is absolutely essential to consult an attorney before taking any steps on your own. You may otherwise find yourself in a situation far graver than simply owing money to someone.
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