Many clients come see me in either my Miami or Fort Lauderdale offices and ask me the following question: “Can I sell all my stuff before I file for bankruptcy?” I generally tend to sway them away from doing this because nothing good can come from doing this. Here are the reasons:
If you are going to sell you goods to your friends or other people for little or no money for the purposes of hiding if from the court you will likely get caught. First you have to list on your bankruptcy petition any property that you have transferred in the last two years. Secondly you will be asked under oath if you have transferred any assets to anyone in the last two years. You will have to answer these questions under oath and could be found guilty of perjury if you lie. Finally the court can consider your transfer of asset to be a fraudulent transfer and could sue to recover the monies.
If you are trying to sell your stuff in order to get more money in the bank and make yourself more liquid prior to your bankruptcy, you will likely lose the money you put into the bank. Under Florida law you can only exempt a certain amount of assets (including monies in a bank account) anything over exemptions could be used to pay back your creditors.
However if you have no choice but to sell some of your property, to survive, prior to the filing of your bankruptcy make sure to sell it in an arm’s length deal (to a person you don’t know) and make sure to get reasonably equivalent value for your item.
You may be better off keeping your property and filing your bankruptcy because under the Florida bankruptcy exemptions you may be able to keep all of your goods post bankruptcy.
It is legal to sell your property for the purpose of paying back creditors, although it doesn’t make much sense. Instead, file for the bankruptcy and see if the debt can be forgiven and your assets could be saved. If you are thinking of filing for bankruptcy and would like a free consultation with a bankruptcy lawyer then contact Shmucher Law, PL at 954.309.5559 or 305.741.5553 to schedule a consultation in any of our 5 office locations (Boca Raton, Fort Lauderdale, Miami, Plantation, and Sunrise).