There is a persistent myth that bankruptcy filers have to sell everything they own. As such, once a person reaches the conclusion that they will likely need to file bankruptcy, they think it is time to start gifting their stuff away. This is because of the mistaken belief that it is better that your friends and family get your stuff, not the Illinois credit card companies. However, not only is this belief a myth but you should also not make fraudulent gifts.
Any time you gift or sell your property, under the federal Bankruptcy Code, it is considered a property transfer. Lending items do not qualify as transfers. For example, if you lend your car to your child, that is not a transfer.
When you file bankruptcy in Will County, in addition to listing all of your debts and assets, you must also list all of your property transfers for the past 2 years. However, for some assets, that 2-year lookback period can be 10 years or more.
Transactions that do not qualify
Not every transfer will qualify for scrutiny. Your normal and reasonable gifts for holidays, special occasions and birthdays will not qualify. However, larger gifts may be examined with more scrutiny. Donations to charities, nonprofit organizations and religious groups also do not qualify, as long as they are not more than 15% of your gross income.
Finally, even though Chapter 7 bankruptcy is known as liquidation bankruptcy, that name is a bit of a misnomer. That is because bankruptcy exemptions allow you to keep many of your assets, and in reality, you may find that you have to sell very little, if anything. However, you should consult with your Will County, Illinois, bankruptcy attorney to see what qualifies.