A question on selling an asset prior to filing

[georgewendt]

Hello Everyone,

First I wanted to say thanks in advance for any help or guidance it is VERY much appreciated. I never thought I would be in this situation but I am and trying to learn what I can so I can make the best decisions.

I have a (hopefully) simple question. I have not filed BK yet, I have met with a few lawyers so I do know the general gist of it but I have question regarding selling an asset prior to filing.

I will be filing chapter 7 if I do file and I wondered if its legal for me to sell an small piece of business equipment that I have prior to filing bk. I would not be selling it to a friend or family member but would sell it for real and will be using the money to pay off some people I owe or possibly work out a deal with one of the collection agencies hounding me right now. The equipment really isnt worth much (maybe 4k) and I know there are exemptions but I wont be getting back into this business after this is all done. Is this ok to do? Once again I have NOT filed yet and probably wont file for a few months.

The same ? applies for a car I have as well, can I sell the car prior to filing and use th money to pay off debt i owe/living expenses etc. In reality I dont have much of anything but I thought it would be a better option to sell it and use the money to pay off some prior to filing (and buy some groceries etc.)

Is this OK or??

Any and all input is greatly appreciated. If I file it will be a personal chapter 7, not business.

Thanks once again,

George

[PoorGrammyinBK7]

I believe (was told) as long as it is an "arm's length transaction" (you don't sell to a friend, relative or business partner, etc) and you get fair market value, there is no problem with selling an asset to spend the money on necessities like living expenses, medical, etc. I would keep receipts in case you have to prove anything though.

As for payments on debt - I would be careful here if you are going to file BK (because of preference rules, etc). If you are only gonna use it to pay debt, I wouldn't even bother to sell it - let the trustee have it and sell it and pay them.

[fltoo]

You can sell to a relative, friend, anyone as long as it is for market value.

Keep receipts on the necessities that you purchased with the money and put time between the sale and the filing.

[georgewendt]

Thanks alot for the quick reply. I have been other forums and asked valid/good questions and havent gotten much in regards to help, so thanks alot for the help, I really appreciate it.


Good, looks I can sell this and use it for necessities then.

[georgewendt]

If anyone else sees any problems with the advice given please chime in, I would appreciate it. I dont want to get into trouble but it makes sense that I could sell something and use it for necessities (rent, groceries etc.)

[willsurvive]

We were told we could sell things, and use the money for debt that can't be discharged (taxes), bills, utilties, etc. If you "pay off" some debts anything over $600 is considered preferential payment and the trustee may go after that money. If you are planning on filing bk, why bother paying those off anyway?