Selling Personal items on e-Bay Before Chapter 7

[CashNCarry]

Has anyone sold household items on e-Bay before filing a chapter 7? I have been selling some electronics and household items over the last few months to make ends meet and raise funds for an attorney. I initially spoke with an attorney during a consultation that said it was probably okay as long as I keep detailed records and sell the items for fair market value which has been no problem since detailed records are automatically created when the auctions are paid to me through my paypal account. The total amount sold is aprox. $2,500 which is from the sale of about 10-12 items over the past 3 months. Some of the information I have read on the web recently about fraudulent transfers has me concerned.

[carlsbadmike]

My attorney said that it would only be an issue if I sold like a $10,000 painting, antique or something of that approximate value.

[backtoschool]

Many people sell items on ebay before filing bk to meet their living expenses and to come up with their lawyer's fee. It is not a problem at all.

[lfllffl]

I sold a $900 eliptical and the trustee asked about it, but when I said I used it for the last of my attorney fees, there was no issue at all...

[CashNCarry]

Thanks for your responses. The following is an excerpt from one of the articles I was reading. I hope the my local bankruptcy court doesn't interpret the law this way.

Is Selling Assets Before Filing Bankruptcy a Good Idea

Assets in Bankruptcy

Selling your assets prior to a bankruptcy is generally not something a bankruptcy attorney would recommend that you do; in fact most would tell you to avoid selling your assets.

In order to understand why selling your assets before bankruptcy is not recommended you need to understand what happens to the assets that you have immediately upon filing bankruptcy:

•Your assets become part of your "bankruptcy estate".
•The assets that are in your bankruptcy estate are used to repay your creditors as much as possible.
•All assets are sold to reduce them to cash.
•The sale of your assets is managed by the bankruptcy trustee, who is charged with getting the best price for the assets that are to be liquidated.
•Every state allows you to "exempt" certain items from being included in the bankruptcy estate; in other words, there are certain items that you will be allowed to keep won't be sold to pay your debts. An example of this might be the car that you drive to work or a certain amount of household goods or the tools that you need to ply your trade.
Selling Before Bankruptcy
If your assets are to be liquidated anyway, why shouldn't you sell them yourself before declaring bankruptcy?

•This could be construed as bankruptcy fraud and an attempt to interfere with the bankruptcy, or hide your assets particularly if the items sold were purchased by friends or family members for considerably less than fair market value.
•Bankruptcy fraud can carry criminal penalties.
•Even if the sales were for fair market value and to strangers, what you do with the funds received could be questioned by the court.
•If you used funds received from the sale of assets two months before declaring bankruptcy to preferentially repay one creditor over others, that is not allowed either and the creditors you paid back could have to turn the money over to the bankruptcy trustee.
•Your bankruptcy discharge can be denied.

[backtoschool]

Selling your household goods to pay for your lawyer is not the same as selling your Porsche to your mother for 1 dollar in order to protect it from the trustee. You are fine.

[tcreegan]

Hi CashnCarry,

No worries, they are talking about someone moving big-ticket items to family or friends in order to hide them from the BK, not someone selling personal items to pay for a BK attorney. As long as you aren't funding a trip to the Bahamas you are OK...

Tom in Colo

btw; Texas, right? You get to exempt $30,000 of personal property in a BK anyway.

[CashNCarry]

It's encouraging to hear that it hasn't been a problem for you guys. Does anyone know if there is a set dollar limit for selling personal property prior to filling a chapter 7 ? Part of what makes bankruptcy so confusing to the layman is there appears to be a great deal of latitude between courts or even trustees in the same court of what is and isn't acceptable. BTW, congratulations backtoschool on your discharge. Must be a great feeling to have it behind you now. I can't wait!!

[tobee43]

Selling your household goods to pay for your lawyer is not the same as selling your Porsche to your mother for 1 dollar in order to protect it from the trustee. You are fine.

yes, exactly...shoot..we actually sold the shirts off our backs to move. i actually sold most of my clothes since i didn't need all my suits anymore.

it would be the same as a garage sale....i know you're just trying to be as honest as possible and that is great.....but somethings just are best left alone.

[CashNCarry]

TC,

Actually a recent move to Houston but due to the 180 day window I am forced to file by the rules of my home state which aren't so generous. Now that you mentioned it, a trip to the Bahamas sounds mighty good right now or maybe even a trip to Colorado for some world class skiing.

[tobee43]

TC,

Actually a recent move to Houston but due to the 180 day window I am forced to file by the rules of my home state which aren't so generous. Now that you mentioned it, a trip to the Bahamas sounds mighty good right now or maybe even a trip to Colorado for some world class skiing.

LOL!!! yes, i would have preferred the bahamas myself! we waited the window period for filing in our new state since our old one was TERRRIBLE!! the move kept the creditors away since we left NO forwarding address or phone number...every single neighbor we had we told them a different state...LOL!! so it must have been really funny when they all got together for their spring meet and each started their blabbing to each other......NO i thought they went to MONTANA........NO...they went to South Dakota...and by the WAY OF: Why don't WE ever see anyone from North or South Dakota on this forum???? just wondering??

[CashNCarry]

Technically by going to the Bahamas you are leaving the US. Your creditors would probably have a really hard time finding you there. I don't think I have enough shirts to sell to fund that trip though.

[backtoschool]

It's encouraging to hear that it hasn't been a problem for you guys. Does anyone know if there is a set dollar limit for selling personal property prior to filling a chapter 7 ? Part of what makes bankruptcy so confusing to the layman is there appears to be a great deal of latitude between courts or even trustees in the same court of what is and isn't acceptable. BTW, congratulations backtoschool on your discharge. Must be a great feeling to have it behind you now. I can't wait!!

Thanks CashNCarry. You will be out the other end of this bk before you know it. As for a set dollar limit to selling property, well I would watch how much it is just so it doesn't get declared as income that will put you over the means test. Anything under that should be fine.