Sold car to family member

Asked 6 months ago - Las Vegas, NV

I am filing a chapter 7 on my business and chapter 13 personally.
I sold my car to my aunt back in June because i needed money.
Will the trustee or courts make my aunt give the car back?

Attorney answers (9)

  1. Shaye Larkin

    Contributor Level 20

    10

    Lawyers agree

    Answered . If you sold your car to your aunt for fair market value (or close to it), it should not present any issues in your bankruptcy case.

    The information provided herein is general information only and not legal advice. The information provided herein... more
  2. J. Scott Dilbeck

    Pro

    Contributor Level 13

    8

    Lawyers agree

    Answered . Probably not a problem so long as you received market value.

  3. Blake Owen Brewer

    Contributor Level 18

    9

    Lawyers agree

    Answered . Chapter 7 on a business? That is pretty rare. Make sure you review this with your attorney. The facts you describe are pretty common and normally innocuous. However, you need to document the date of the sale, the amount received in exchange, whether the car was roughly worth what the buyer paid for it, whether the transfer was for antecedent debt, and what happened to the money you received. More of a Chapter 7 issue, not a Chapter 13 issue, but still be prepared to review it with your attorney.

    I am not your attorney unless you and I have signed a retainer agreement. What I am saying is not legal advice.... more
  4. Derek R. Caldwell

    Pro

    Contributor Level 18

    7

    Lawyers agree

    Answered . I agree with Mr. Brewer that Ch7s for small businesses are relatively rare. I also agree that as long as you sold the car to your aunt for a reasonable approximation of fair market value, this should not be a big deal. It is a problem if you sold her a car with a FMV of $10k for $1,000 but if you sold her the car for $9,500, not a big deal. Make sure you discuss this with your attorney.

    DISCLAIMER: This message is intended as a general discussion of legal issues and not as a statement of fact, legal... more
  5. Brent J Jensen

    Contributor Level 13

    5

    Lawyers agree

    Answered . Selling property to relatives is only a problem is you sold it for a lot less than the market value. If you sold it for the market value, you should be just fine.

    This is not legal advice and I am not your attorney until you retain my office. Always consult with an attorney in... more
  6. Richard Edmund Hawkins

    Pro

    Contributor Level 16

    3

    Lawyers agree

    Answered . Chapter 7 for a business is almost always a bad idea.

    There is no discharge, just a trustee selling assets, and looking at *you* to recover every payment to or purchase for you as far back as he can.

    Usually, I would list all the business debt as contingent, unliquidated, disputed personal debts.

    If you sold the car for a fair price, there would be nothing for the trustee to do. If you sold a $2,000 car for $5,000, though, the trustee may seek to undo the transaction. This is fairly easily resolved in a 13, however.

  7. Paul Elliot Ross

    Pro

    Contributor Level 9

    3

    Lawyers agree

    Answered . I also agree with Mr. Brewers recommendations for you on the transfer of the vehicle. You would be forced to increase your Chapter 13 plan payment if you have sold it to your aunt for an amount less than it was truly worth. That difference becomes the amount you need to increase your payments....

    Bankruptcy Debt Relief Legal Counsel
  8. Richard D. Granvold

    Pro

    Contributor Level 18

    3

    Lawyers agree

    Answered . I agree with the attorneys and you by now realize if sold for near or at fair market value and NOT given to her for payment of a prior debt then no problem. However I don't want you to be concerned on the statements about filing a ch 7 on a business. If it is a sole proprietorship or a corporation which you have personal debts from guaranteeing, etc..chapter 7 cases are filed all the time so I just don't want you to be overly concerned or worried in those comments. Speak to an attorney in your area who has practiced bankruptcy for a number of years ..it is usually free and they would have already answered that question for you easily also as most of us use a checklist to make sure we go through all issues.. One of those is if you have transferred any assets in last 2 years (and some ask re transfers to family members in last 5 years)..Good luck and I hope I have helped your concerns too.

  9. Andrew T. Velonis

    Contributor Level 12

    2

    Lawyers agree

    Answered . Probably not. There could be questions about whether this was a fair martket price, were there side-deals which would make the arrangement fraudulent, whether anyone else had any interest in the matter, etc. Also, what happened with the money.

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