selling stocks before chapter 7

[cat]

Okay- at first I wasn't sure how to post a new thread-
But here's my question

Is is fraud to sell stocks right before you file Chapter 7?

Anyone know?

Thanks
cat

[Joe Cal]

Hello,
I believe you have to do so at least six months before you file for Chapter 7. So either don't sell them or wait another six months before filing. I'm not positive, so maybe consult a bankruptcy attorney first.
Joe

[emoney]

No it is not fraud to sell stock or anything else of value before filling BK. The proceeds will become part of you estate and subject to fofiture, and the proceeds distributed to your creditors.
Thanks,
emoney

[lrprn]

Okay- at first I wasn't sure how to post a new thread-
But here's my question

Is is fraud to sell stocks right before you file Chapter 7?

Anyone know?

Thanks
cat

If you transfer or sell your stocks to an insider (family member, close friend, etc) with the intent to hide the stocks as an asset, then yes, that is fraud. However, if you sell the stocks and use the money to pay off legitimate debts at least 90 days before filing, then that is not fraud and you put the very difficult burden of proving it on the trustee. If you sell the stocks within 90 days before filing, then that allows the trustee to consider the proceeds as a part of your estate and he/she can recover the money from the sale and distribute it to your creditors.

If you are using a lawyer to file, be sure to ask him/her this question. They know the specifics of your case. Hope this helps!

[FilingOnMyOwn]

It mostly depends on the value of your holdings. If you try to hide any proceeds from your sales regardless of their value, you could end up in big trouble.

[Brokerthanbroke]

What about in our case, when we sold stock and portions of 401K just to make ends meet. Couldn't even pay creditors other than house and cars. When DH was injured all our money coming in from the business went right back out to the subs we had to hire to actually do the jobs!

We had to finish off the stock and some of the 401K to make ends meet.

+ I've used some of my 401K to prop up my business...which is FINALLY turning a corner! Not profitable yet, but not losing money anymore!

[aa06a47]

The only issue I see in selling stocks is the proceeds from the sale of that stock is used as part of your pervious 6 month income calculations. I wouldn't worry about fraud if your selling the locks to make ends meet. Below is a link of the case where the court said money received from a 401k is used to figure monthly income.

http://www.mow.uscourts.gov/opinions/bankruptcy/venters/zahn_sanchez_opinion.pdf

With that said, if your filing for BK, don't liquidate your 401k. It is a protected asset.

[lrprn]

Below is a link of the case where the court said money received from a 401k is used to figure monthly income.

http://www.mow.uscourts.gov/opinions...ez_opinion.pdf

Thanks for the link, aa. Makes me very relieved that although my hubby did foolishly withdraw funds from his 401K several times, the last withdrawal was well beyond six months before we filed. I feel bad for the two families in this case who will now be pushed into a five year Ch 13 rather than a straight in and out 7. I wonder if they could have held on until six months had passed so their withdrawn 401K funds couldn't be added to their regular income? Guess it's a moot point now....sad....