selling assets, for home furnishings

[BBNLB]

I have my first meeting with an attorney this week and I have a few assets that are paid for, so I've sold them. If I sold them for cash do I half to report the sell ( I have not signed with an attorney or filed yet)But going to.
Can the trustee go back and check what I HAD in pink slips and know I sold these items before filing BK.

[justbroke]

Yes, you have to report on all property that you sold or transferred! Hopefully you received current market value for them.

[BananaCabana]

Curiosity

We have sold two timeshare properties that we will report when we file. My question is what does the trustee do with this information? One of the properties we only made a profit of about $1000 (cashed the check but not through my bank account; used for food, holiday gifts, school field trips, etc.) and the other one we are waiting for the proceeds to come any day of about $4-5000. That I will deposit into the bank account. I guess I just want to make sure that as long as we use it for normal bills, medical and dental rather than going out and buying luxuries then it will all be acceptable to the trustee? Or do you think that the fact I am getting everyone caught up on medical visits, dental and vision work will raise a flag? There are six of us so that cost can be quite high when it is all said and done.

Would a trustee say that we should have used the money instead to pay off creditors or is it acceptable to do the dental/vision, medical thing?

On one hand I think I know the answer to this, yet on the other hand my doubts and questions always creep their way into my mind.

[BobMango]

The trustee really looks for three things,1) did you transfer this to a friend or relative to protect it from the bankruptcy, 2) did you get fair market value for it, and 3) what did you do with the money.

Provided you are ok on 1 and 2, you should be fine on number 3 if you spent the money on the kind of items you mentioned. Using the money for one last fling in Hawaii before you file would raise a flag, but paying your doctor or buying groceries is fine.

[HHM]

Make no mistake, you CAN/MAY sell assets prior to filing bankruptcy. The only issue is whether the sale was a legitimate transaction.

Selling a bunch of old junk and furniture at a garage sale, fine.
Selling your jet ski on craigslist to someone you don't know, fine
Selling your motorcycle for $1, NOT fine
Selling your car to your brother for half of what it is worth, NOT fine.
etc.

Also, you CAN/MAY sell assets to raise cash and then move that cash into nonexempt assets. If you want to sell your motorcycle for $5,000 and then put that $5K in an IRA to exempt the cash, fine.

[ssmdem]

Make no mistake, you CAN/MAY sell assets prior to filing bankruptcy. The only issue is whether the sale was a legitimate transaction.

Selling a bunch of old junk and furniture at a garage sale, fine.
Selling you jet ski on craigslist to someone you don't know, fine
Selling your motorcycle for $1, NOT fine
Selling your car to your brother for half of what it is worth, NOT fine.
etc.

Also, you CAN/MAY sell assets to raise cash and then move that cash into nonexempt assets. If you want to sell your motorcycle $5,000 and then put that $5K in an IRA to exempt the cash, fine.

I'm confused now. My husband was trying to sell his motorcycle to pay back his dad who bought it for him. Now, I get that we shouldn't give his dad the money right now - and he's fine with that. But our attorney said don't sell anything at all!! He said to wait until after it's discharged and then we can sell it. So, you're saying selling it on Craigslist or Cycle Trader would be fine, so long as we used the proceeds for attorney fees, living expenses, etc.??

[BBNLB]

Thanks for the info, But everybody is saying selling and getting fair market value. The way the market is right now I cant get any buyers unless I cut the price well below what it's worth.
Example I sold my corvette for 14,000 and low book is 15,000. I'm selling two ATV qauds for about 1000 less than what I would sell them for if I was not in this position. Is this koshur.

[BobMango]

I'm confused now. My husband was trying to sell his motorcycle to pay back his dad who bought it for him. Now, I get that we shouldn't give his dad the money right now - and he's fine with that. But our attorney said don't sell anything at all!! He said to wait until after it's discharged and then we can sell it. So, you're saying selling it on Craigslist or Cycle Trader would be fine, so long as we used the proceeds for attorney fees, living expenses, etc.??

Selling it and giving the money to your FIL would be considered a preferential payment. He has to get in line with the other creditors.

Most attorneys give that advice because it makes it easier to complete the process. Selling assets does generate the need for more explanations, etc. But there is no reason you can't do it, as long as you do it correctly (fair market, no relatives involved, no preferential payments, etc)

[BobMango]

Thanks for the info, But everybody is saying selling and getting fair market value. The way the market is right now I cant get any buyers unless I cut the price well below what it's worth.
Example I sold my corvette for 14,000 and low book is 15,000. I'm selling two ATV qauds for about 1000 less than what I would sell them for if I was not in this position. Is this koshur.

Blue book is not fair market. Fair market is what the market will pay. Trustees will use blue book values for exemptions since that's to their benefit. I'd be willing to challenge the trustee on fair market value of assets I sold (and did, for two cows and a motorcycle). It certainly helps if you have the ad you used to sell the asset and did not sell to a friend or relative.

[HHM]

I'm confused now. My husband was trying to sell his motorcycle to pay back his dad who bought it for him. Now, I get that we shouldn't give his dad the money right now - and he's fine with that. But our attorney said don't sell anything at all!! He said to wait until after it's discharged and then we can sell it. So, you're saying selling it on Craigslist or Cycle Trader would be fine, so long as we used the proceeds for attorney fees, living expenses, etc.??

Keep in mind, fair market value is what someone is actually willing to pay for it, if you are not selling it, that means you have it priced too high.

The advice to sell or not sell depends on your state's exemption scheme. If all the assets are exempt, then there usually is no reason to sell prior to BK. If you have some non-exempt assets, one of the ways for you to get the benefit is to sell prior to BK and use the cash for necessary living expenses or move the cash into an exempt asset.

If you simply need cash, you can sell stuff prior to BK.

The worst possible thing you can do is sell something and payback a family member.

[BananaCabana]

I still can't imagine a trustee NOT frowning upon me putting the $5k I earned on the sale of the timeshare into an IRA. I am afraid he/she would consider that action as me trying to "hide" funds. Not actually hide them, but definately getting away without having to fork over the money to someone else and being able to keep it myself. And then it may just make him/her scrutinize my case more. It just seems somewhat underhanded although I have read that it is acceptable in most cases. We are middle district Florida like so many others and as soon as I can convince myself that noone is going to disagree with me putting it into my IRA then I will do so. I haven't contributed to any retirement plan since Jan of 2009 and that is another reason I feel it would jump out at a trustee as a big flag. "This woman hasn't contributed anything since 1/09 and now she dumps $5000 into it when she sells an asset." I suppose I should start contributing now for as long as I can while I am not paying rent/mortgage.

[ssmdem]

I still can't imagine a trustee NOT frowning upon me putting the $5k I earned on the sale of the timeshare into an IRA. I am afraid he/she would consider that action as me trying to "hide" funds. Not actually hide them, but definately getting away without having to fork over the money to someone else and being able to keep it myself. And then it may just make him/her scrutinize my case more. It just seems somewhat underhanded although I have read that it is acceptable in most cases. We are middle district Florida like so many others and as soon as I can convince myself that noone is going to disagree with me putting it into my IRA then I will do so. I haven't contributed to any retirement plan since Jan of 2009 and that is another reason I feel it would jump out at a trustee as a big flag. "This woman hasn't contributed anything since 1/09 and now she dumps $5000 into it when she sells an asset." I suppose I should start contributing now for as long as I can while I am not paying rent/mortgage.

I feel the same way. We stopped contributing in October, and at the time were only contributing 5%. I'd like to at least restart it but would like to bump it up to the 15%. But like you, I thought this would look funny to the trustee. Just got to talk it over further with my attorney I guess. With me, we took out a 401K loan (STUPID, STUPID, STUPID!! - I'm still kicking myself), but could I just pay back more on the loan (there's no prepayment penalty) -- would this be considered a preferential payment?

[JackBondLove]

The trustee really looks for three things,1) did you transfer this to a friend or relative to protect it from the bankruptcy, 2) did you get fair market value for it, and 3) what did you do with the money.

Provided you are ok on 1 and 2, you should be fine on number 3 if you spent the money on the kind of items you mentioned. Using the money for one last fling in Hawaii before you file would raise a flag, but paying your doctor or buying groceries is fine.

Agreed. My trustee asked why I sold a vacant lot for 2/3 the price I paid for it (because that's the current real estate market, DUH!) I said I was lucky to get even that!

[hackjob]

Re: Hhm

HHM's comments: The advice to sell or not sell depends on your state's exemption scheme.

Listen to HHM!

There's nothing illegal with planning. It all depends on your state. I live in CA and will be filing under System 2 as I don't own a home. It's very generous, a 21,000+ wildcard exemption. So, for me converting non-exempt assets to cash (via Craig's List) makes sense because I am self-employed and need the cash to get through slow summer employment (when I plan to file.)

For me, understanding the simple logistics of "properly" executing stuff like paying bills while in BK... it defies logic... conceptually ridiculous... like a silly shell game.

[blessed]

Keep in mind that a lot of people start selling things, almost in a panic, to stay above water and pay bills before they realize bk is inevitable. It's not uncommon to have items sold months before filing, like HHM said, it's the who and how much that matter most.