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Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 26131
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by West
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I plan to file for bankruptcy in 6 months. Can I transfer non-exempt

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I plan to file for bankruptcy in 6 months. Can I transfer non-exempt property (firearms and wedding rings) to my mother to repay a loan to her for down payment on a home I purchased previously? I want to transfer this property sooner than 120 days before I file bankruptcy so I shouldn't have to show it when I submit my Statement of Financial Affairs on Form B7 under Paragraph 6, Assignments and Receiverships. Is my interpretation correct since she is a preferred insider creditor? Do trustees have the ability to see what firearms I have previously purchased through the background checks I had to complete? Thanks. Terry
Submitted: 11 months ago.
Category: Bankruptcy Law
Expert:  Roger replied 11 months ago.
Hi - my name is XXXXX XXXXX I'm a Bankruptcy litigation attorney. Thanks for using JA! I'll be glad to assist.

Transfers to family members are actually subject to a 1 year look back period. Also, unless you have a written contract with your mother for this loan, it would be very, very difficult to justify the transfers as there would be no proof in writing that proves the property is being transferred to pay a debt,

If you do have a written loan agreement, then your mother would be considered a preferred inside creditor if she's paid within a year of the filing -- which could allow the trustee to reverse the transaction.

Here's a good link you can read:

As for looking into the firearms, this would be practically impossible for the trustee to find out unless you've registered the guns.
Customer: replied 11 months ago.

I thought financial payments were subject to a 1 year look back to insider creditors (family) but property transfers to creditors were only subject 120 day look back. I want to transfer the property for the debt in lieu of selling the non-exempt property for cash and then making finanicla payment to satisfy the loan.


As far proving the loan, I do not have a loan agreement per se but I can show the receipt of her check. Although I did have to get a gift letter to qualify for the loan. I have been making $500.00 monthly payments until I got into financial trouble.


Am I better off selling the non-exempt personal property and paying off two 401(k) loans? Would it then be protected under the pension exemption? could I be criticized for gaming or defrauding the system? Thanks for the clarification. I really appreciate it.


Expert:  Roger replied 11 months ago.
If the property transfers are done in lieu of cash, it's considered as a cash payment/transfer.

If you don't have a loan contract or a promissory note, it's going to be tough to justify the transfer.

Even paying off the 401k loan could be considered a preferential payment. The pension exemption wouldn't likely extend to a loan from a retirement account.
Customer: replied 11 months ago.

Thanks. Very nice responses. One last question and I will leave positive feedback and a tip. When you mentioned registering a firearm, were you referring to firearms like class 3 weapons (machine guns, silencers, etc.)?


There is no Federal registration requirement for most conventional sporting firearms. Only those firearms subject to the National Firearms Act (NFA) (e.g., machineguns, short-barrel firearms, silencers, destructive devices, any other weapons) must be registered with ATF.


I want to make sure that when I purchased a firearm through an FFL dealer and did a background check, the trustee would not be able to see this. Correct? I purchased a pistol and lost it when I was hunting. It was over 12 months ago. I wasn't sure if some creditor could pick up the purchase on my credit card bill and then have the trustee ask, where is this gun and why didn't you declare it on your personal property. Just curious...

Expert:  Roger replied 11 months ago.
I think you're correct. If there's no mandatory registration, it's not likely that anyone would know that you owned it. So, you should be safe.
Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 26131
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by West
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