Will my truck be liquidated in a chapter 7 bankruptcy?

[herald]

My parents may be filling for a chapter 7 bankruptcy and have 4 cars in their name (my truck included). I just paid my truck off and am about to put it in my name. If my parents file for bankruptcy soon after I put my truck in my name can they still take my truck? I heard there was a year time period between letting go of assets and filling for banckruptcy before those assets cannot be taken. I live in Colorado Springs, im sure theres different laws depending on state of residence.

[elton]

It depends. Transfers of property to relatives (i.e., "putting it in your name") without payment of fair market value (i.e., without evidence that you paid your parents what the truck was worth before the title was transferred) will be seen as evidence of bankruptcy fraud.

I know that many, many, many people have various arrangements whereby (e.g.) the parents will purchase the vehicle and put it in their own name (also for insurance purposes) while their son or daughter actually drives the vehicle and makes the payments on it. UNFORTUNATELY these kinds of arrangements cause particular problems in bankruptcy because the bankruptcy courts don't recognize the common sense notion that the vehicle "really" belongs to whoever was driving it and/or making the payments on it. The bankruptcy courts recognize whatever it says on the registered title -- that person is the legal owner of the vehicle.

So ... even if the vehicle was in your parents' name and you made all the payments on it, so far as the bankruptcy court is concerned, your parents still own the vehicle and for 2 years prior to filing bankruptcy they can't just GIVE it to you (i.e., "transfer the title to your name") tho they can SELL it to you - see next paragraph.

Your parents are entitled to SELL you the truck at fair market value (i.e., not for $1 or other similar amounts) prior to filing bankruptcy and then they will need to account for the money paid to them for it. But absent a bill of sale and their account of where the money went from the sale, they can't just give it to you (i.e., transfer the title). If they transfer the title without receiving payment of fair market value in return within 2 years of filing bankruptcy (1 year for non-relatives) the bankruptcy trustee will retrieve the truck from you and sell it to repay creditors. Fair market value is determined by the so-called "blue book" value of it, or other similar indices.

Your parents need to contact an experienced bankruptcy attorney in person and discuss these kinds of issues before filing bankruptcy. They should NOT get their bankruptcy advice from the Internet, which is absolutely full of inaccurate, outdated, or just plain wrong bankruptcy "info."

Bankruptcy law is Federal law. It is the same in all 50 states. What differs from state to state is what property debtors can "exempt" from being taken by the bankruptcy trustee to be sold to repay creditors.

[wal49]

Yes, bankruptcy laws are different depending on your residence. Its good for you to contact any local bankruptcy attorney and get free consultation on your problem. You can use www.filingbankruptcynow.com for such free case evaluation.

[hjortur]

If it is in your name, and paid for, then they can't take it.