I'd like to sign over vehicles to wife prior to BK. Fraudulent?

[Samba]

If I sign over 2 vehicles to my wife today in anticipation of filing personal bankruptcy in 6 months when my unemployment benefits expire, can they prove it to be fraudulent? One is only worth $2,500 the car I bought her that only she drives, but the other is a recently restored vintage vehicle that insured for 40k that I intend to leave for my son. I paid 25k in checks within the last year so there would be a paper trail.

I have lost my job in the last week, no one is hiring and I am unable to take advantage of the Federal extension of unemployment benefits.
The house mortgage is in my name and I don't think I have any equity in it I have maxed out the credit card two months before being laid off. I owe 12k on that.

I guess I am basically asking how far back do the trustees look for large purchases ( I bought the vehicle 3 years ago) and/or signing over or selling vehicles prior to filing? I live in Texas
Thank you in advance.

[despritfreya]

You must disclose all transfers within 2 years prior to filing. The Trustee has the right to use your State's fraudulent conveyance statute. My State's statute is a 4 year window.

DO NOT transfer the vehicles as you are just asking for trouble.

If you have a non exempt asset you wish to keep do not file a Chapter 7. File a Chapter 11 or 13 and pay your creditors the value of the asset over time.

[momofthree]

So you owe $12k on credit cards and have an asset worth more than twice that amount?

I don't think bankruptcy is a good option for you. They're going to seize the asset to sell it and pay off all your debt. It's too late to transfer the title to your wife--as the pp stated, that is a fraudulent transfer and they look back 2-10 years depending on your state.

[Samba]

Thank you for the replies. I was afraid of that. I certainly do not want to risk jail over a vehicle or put my wife in an undesirable situation.

If I have income I will gladly pay what I can to the credit card company and the mortgage. But it appears that if I don't find work in the next 6 months I will loose my dream vehicle I have spent so much time and money to restore and give to my son. The ironic thing is i just got it back from 3 years restoration 2 weeks before being laid off.

So my only option that I know of (other than to sell the vehicle for a loss in this market) is to allow the bank to charge off my credit card and attempt to settle with the collection agency and allow the bank to foreclose on my house?

If the credit card company attempted to sue me for any future judgment could I be forced to sell the vehicle?

[despritfreya]

In response to:

"If the credit card company attempted to sue me for any future judgment could I be forced to sell the vehicle?"

Outside of bk, if a creditor obtains a judgment the anwer is "yes" but subject to any state allowed exemption.

[tinfoilhat]

If the credit card company attempted to sue me for any future judgment could I be forced to sell the vehicle?

In Texas you can keep one motor vehicle under exemption. So if thats the only one in your name they shouldn't take it.

[wonderingrov]

Thank you for the replies. I was afraid of that. I certainly do not want to risk jail over a vehicle or put my wife in an undesirable situation.

If I have income I will gladly pay what I can to the credit card company and the mortgage. But it appears that if I don't find work in the next 6 months I will loose my dream vehicle I have spent so much time and money to restore and give to my son. The ironic thing is i just got it back from 3 years restoration 2 weeks before being laid off.

So my only option that I know of (other than to sell the vehicle for a loss in this market) is to allow the bank to charge off my credit card and attempt to settle with the collection agency and allow the bank to foreclose on my house?

If the credit card company attempted to sue me for any future judgment could I be forced to sell the vehicle?

From what I read in the first post it looks like you are basically one week into unemployment - is that correct? If so, you might want to check with your credit card companies to see if they have hardship programs before things start getting delinquent. I know on two of mine, I had insurance that would pay the minimums for a period of time if I was laid off. You might check with the mortgage company as well to see if there is anything they can do to work with you.

[Samba]

In Texas you can keep one motor vehicle under exemption. So if thats the only one in your name they shouldn't take it.

I have 3 vehicles in my name. One worth $2,500 (2002 Mercury Cougar) one worth at least $10,000 (A restored 1977 VW Bus) and the fully restored 1959 VW Bus insured for $40,000.

I assume they would take the two VWs because of the exemption amount limits even under Federal?

I called the credit card company and they offered to cut the interest in half, close the account and allow me to pay $250/month for 5 years. That is about $50/month more than I would like to pay considering how much I am supposed to get from unemployment benefits. Considering I still have to pay mortgage, insurance, utilities etc.

I have not contacted the bank about the mortgage yet. I was trying to get my duckies in order before I do that. BTW Bank of America is the bank for both my credit card and my mortgage. They bought out AAA a year after I got the card. I don't know if that matters or not.

[researchnerd]

I think you are correct on the cars - since both of the VWs would be outside the exemption limits, you'd have to give them up in a Ch7. Ch13 could work though, as long as your creditors are getting as much as they would have gotten in a Ch7. I have no idea what happens with a judgment though, especially if you don't have a salary for them to garnish.

It seems like the simple solution would be to sell the $40k VW, pay off your CC debts and keep the rest in reserve in case it takes a while to find a job. You could avoid BK and judgment completely that way. It sucks to lose your dream car, especially if you have to take a bit of a loss on it, but it might help you keep your house.

Also, if you have bank accounts with B of A, you may want to consider switching to another bank if there's any chance you might default on any of your loans/credit with them.

[Silver26]

Sell your car, buy something reasonable use the difference to pay of your debts or use the money for living expenses for a while and then file if you feel you need too. Regardless you need to make sure you can live after the BK as well. Might be best to just see what happens over the next year and where your at financially.

[Samba]

I had a free consultation with a BK lawyer yesterday. Basically if it comes down to it, Ch 13 would be the best choice if I end up being sued by the credit card co.
That will allow me to keep all my vehicles as long as I pay the estimated $280 a month for 5 years. Unfortunately I don't own the house so there would be no way to protect it if my unemployment runs out before I find a job.

I think I would do better to allow foreclosure and default and wait for an offer. It's a gamble. I mean what are the odds that they will keep adding interest and then not offer a reduction then just sue me?

Wouldn't foreclosure and default on a cc be better in the long run than bk on my record?