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Roger
Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 31513
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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I am helping my son buy a car, the owners gifted the car to

Customer Question

I am helping my son buy a car, the owners gifted the car to their son. Now the owners are filing bankruptcy or have filed bankruptcy. I do not know if they gifted the car before or after they filed. I am thinking that they gifted the car to shelter it as an asset, protecting it from bankruptcy. If we buy the car can the bankruptcy court force us to return the car, and we would therefore be out $13000. The title is in the sons name. We live in Arizona and I do not know if bankruptcy laws very state to state.
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  Roger replied 1 year ago.

Hi - my name is ***** ***** I'll be glad to assist.

Bankruptcy is primarily based on federal law, so most of the procedural rules are the same in every state. That said, IF the owners are planning on filing bankruptcy or have filed bankruptcy and transferred this vehicle to their son as a gift (meaning that the son gave no value/not the fair market value), then the bankruptcy trustee can claim that this was a preferential transfer or an attempt to shield the property from bankruptcy, cancel the transaction and take the car back.

Expert:  Roger replied 1 year ago.

That would leave you with no car and the obligation to go after their son/seller for the money you paid....and who knows how that may turn out.

Expert:  Roger replied 1 year ago.

Generally, any transfer of property within 1 year of filing bankruptcy is subject to review by the bankruptcy court and/or trustee....and any transfers of property for no money or gifts to relatives are going to be flagged. Here's a good link you can read: http://www.nolo.com/legal-encyclopedia/i-transferred-property-name-should-i-wait-file-bankruptcy.html

Expert:  Roger replied 1 year ago.

Thus, it's not likely a good idea to buy this vehicle unless you have something in writing from the bankruptcy trustee agreeing to the transaction.

Expert:  Roger replied 1 year ago.

Please let me know if you need anything further. Also, please take time to positively rate our conversation. Thanks!