If you are considering filing for bankruptcy and planning to transfer property using a quitclaim deed, bankruptcy fraud accusations could be in your future. While it is natural to be concerned with protecting your important assets such as property from your creditors, you should not transfer any assets before a bankruptcy without first seeking advice from a bankruptcy attorney.
A quitclaim deed is a legal document that transfers all of the interest that one person (or a married couple or other entity) has in a property "as is" to another person, couple or entity. No warranties are implied with a quitclaim deed, so if there are any defects on the title, or liens or other obligations they transfer with the property.
When you file for bankruptcy, all of your assets that were not legally exempt from the bankruptcy (this varies by state; another excellent reason to contact an attorney while you are still planning a bankruptcy) become part of something called a "bankruptcy estate". If you are filing Chapter 7, the assets in the bankruptcy estate are sold to pay your creditors.
Back to the earlier example: if you are financially insolvent and struggling to make ends meet but just cannot bear to lose your vacation home in the mountains and you Quitclaim it to your aunt 10 months before filing bankruptcy, the bankruptcy Trustee could sue your aunt for that property to be returned and include it in your bankruptcy estate to be sold off.
The court will look into the circumstances surrounding aquitclaim deedtransfer that was made up to two years before the bankruptcy, and can look back up to ten years prior to the bankruptcy if they suspect intentional fraud. Suspicion will be raised if:
Bankruptcy fraud is a crime; at a minimum your bankruptcy discharge will be disproved or revoked if you commit bankruptcy fraud. Do not transfer any assets if you are having financial problems; talk to an experienced bankruptcy attorney first. This is too serious to try and figure out on your own.
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