Bankruptcy

Can I Donate My Car to the Church before I File my Chapter 7 Bankruptcy in Arizona?

By Joseph McDaniel, Esq.

The adage in insolvency law is that you must be fair before you are generous. It surprises me, because I'm an Arizona bankruptcy lawyer, that so many people want to be generous, just prior to filing a bankruptcy case here in Phoenix.

So if you have a car that you can't keep because it's not exempt, you can think about selling it at arm's length to somebody who buys it for close to fair market value, and then use the proceeds to buy food, fuel and provisions (baby formula? diapers? toothpaste? It's not clear what provisions may be).

But don't give the car to anybody or any organization you like prior to filing. It's a clear fraudulent transfer (you don't need fraudulent intent to make it a fraudulent transfer) because in Arizona, there's a FOUR-YEAR fraudulent transfer statute that's available, through state law, to the trustee in your case.

Now, you probably weren't insolvent four years ago, so the birthday present you gave to your kid is probably okay, IF YOU GAVE IT TO HIM FOUR YEARS AGO, WERE NOT INSOLVENT AT THE TIME, AND YOU TRANSFERRED TITLE BACK THEN, NOT NOW.

NOTHING HERE CONSTITUTES LEGAL ADVICE RE A CHAPTER 7, CHAPTER 13, CHAPTER 11, OR CHAPTER 12. FIND AN ARIZONA BANKRUPTCY LAWYER WHO IS BOARD CERTIFIED IN BANKRUPTCY LAW, AV RATED, AVVO 10 RATED, ON SUPERLAWYERS, OR JUST VERY EXPERIENCED AND A FORMER CHAIR OF SOME BANKRUPTCY SECTION OR COMMITTEE. NOTHING HERE MAY BE USED AS LEGAL ADVICE IN CONNECTION WITH ANY BANKRUPTCY, WHETHER THAT BANKRUPTCY IS IN PHOENIX, GLENDALE, TEMPE, MESA, SCOTTSDALE, OR ANYWHERE ELSE.

Full post as published by Arizona Bankruptcy Attorney Blog on August 04, 2009 (boomark / email).