Bankruptcy involves a series of processes to help debtors deal with financial problems. Among these is voluntary transfer.
What is Voluntary Transfer?
Voluntary transfer refers to the transferring of a debtor’s asset to another person without any agreement or payment. This is a common practice if the debtor wants to hand the property to another individual to keep creditors from acquiring the property like in case of repossession. Since the transfer has the debtor’s consent, the new property owner will have a say on the transferred property.
Understanding the Concept of Voluntary Transfer
Transferring can be a good or bad thing depending on the debtor’s situation. Once a property has been transferred, the trustee may be granted legal right to reclaim the property from the new owner. Therefore, the trustee may still be able to use it for repaying creditors.
Some individuals think that voluntary transfer is a solution for saving their properties for a lot of reason like sentimental value or actually saving themselves enough money to start again after filing for bankruptcy. However, doing this procedure may cause ineligibility for filing the handed property as an exemption and as a mean for starting up again. This is a property given willingly to another party before the bankruptcy process, which leaves a negative impression in the process of paying creditors. Many debtors think that this will help them exempt their properties. However, it will only show that they are trying to transfer properties just to keep creditors from getting paid. A property can only be decided as an exemption according to specific rules. The concept of exemption is leaving some properties behind for the debtor to have enough funds to start again and not to deprive creditors the right to get paid. Exemption is a legal way of retaining some properties rather than transferring them with consent to another person.
Being able to Do Voluntary Transfer
Voluntary transfer is not all bad as it can be a good strategy when it comes to money matters after filing for bankruptcy. However, it is important to consult an expert to ensure the transfer will not seem like a fraudulent conveyance. The bankruptcy lawyer will tell you whether the property can be exempted, which means there is no need to transfer its right to another individual to protect the property. If the transfer is going to be necessary, the lawyer will inform the debtor if the transfer meets the legal standards or not to avoid further problems. A lawyer will double check the asset and the debtor’s financial status to ensure they are giving out the right advice.
People may see this procedure a good option for saving their properties. However, it is essential to consult a bankruptcy lawyer first to avoid having problematic transfers that may affect the filing process. Work with a reliable lawyer to know more about voluntary transfer and its advantages.