If you are thinking about working with a bankruptcy law firm to file your bankruptcy case, you may want to consider whether you have car titles in your name that do not belong to you. This is a situation that comes up more often than not for various reasons. When you file for bankruptcy, a debtor is allowed a certain amount of exemptions that protect assets from being sold by a trustee for the benefit of your creditors. In Washington State, Federal or State bankruptcy exemptions may be utilized to protect personal property. Depending on what assets a person has, will determine what set of exemptions are used as both State and Federal exemptions may not be applied. This brings me back to my original point, which is, if you have a title to a vehicle in your name, that you don’t consider yours, this asset will still count towards your exemption limits because the bankruptcy court believes the asset is yours. This can cause a potential problem for many debtors because they do not have enough exemptions to go around and protect all of their assets, including cars that are titled in their name, but are not actually theirs. If the bankruptcy case was filed without enough bankruptcy exemption protections, then this asset may be sold by the bankruptcy trustee.
Therefore, the natural reaction of a debtor is to transfer the title of the vehicle out of their name prior to filing bankruptcy, however this could be considered a fraudulent transfer. This is because a debtor cannot try to defraud the trustee of his right to sell property, that otherwise would have been property of the bankruptcy estate. So, if you are planning on filing bankruptcy and you don’t have enough exemptions to protect all of your assets and vehicles that are not in your name, then you should transfer the vehicle titles out of your name and wait a very long time before filing bankruptcy to make sure you don’t get any fraudulent transfer objections. For another take on this please visit the bankruptcy law network.
If you have additional questions regarding whether you will be able to keep all of your vehicles when you file bankruptcy, please schedule a free consultation with Symmes Law Group today by calling 206-682-7975