One of the most common blunders we see debtors make pre-bankruptcy is transferring real estate property before filing. Most commonly, debtors transfer property to relatives in an effort to protect their assets; but sometimes non-debtor relatives transfer property to a relative who eventually files for bankruptcy. Usually it is a parent who decides to transfer ownership of a home to his/her child while still paying all of the bills associated with the house, including the mortgage, utilities and property taxes. Their reasoning is that if something happened to them, their child could simply take over the property without going through probate.
Unfortunately, this type of transfer can jeopardize the asset if the child files for bankruptcy while the property is in his/her name. Even if the debtor’s parent is paying all of the bills associated with the home creditors will attempt to seize the property in an effort to recover payment for debts owed.
If you’re considering bankruptcy and your name is on the deed of your parent’s home, please do not attempt to transfer the property back to them in an attempt to fix the mistake. If you transfer the property back to your parent before filing for bankruptcy, it will appear that you are intending to hide assets from the bankruptcy court.
If the bankruptcy court believes that you are taking actions to abuse the system, they may deny your bankruptcy discharge. If there have been property transfers that may negatively impact your bankruptcy case, please speak with your Dallas bankruptcy attorney before filing for bankruptcy.
(source: bankruptcylawnetwork.com)