Bankruptcy Myths - Part #3 | Maryland Bankruptcy Lawyer

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Bankruptcy Myths – Part #3

Myths and urban legends abound on the internet.  It’s easy to take a picture and slap a factual claim on it.  Maybe it’s a wrongly attributed quotation, or the claim of a conspiracy theorist.  When I see one of these quotes or claims that just seem a little off, I turn to the urban legend debunkers at Snopes.  Similar urban legends exist about bankruptcy and debt resolution.  Whether it’s a claim by a debt settlement scam artist that President Obama was going to help you get out of debt, or the terrifying story of a man just down the street who filed bankruptcy and lost his house, his car and his dog, you need a resource to help you figure out truth from legend.  As they say, every urban legend comes from a grain of truth, we’ll help you find that grain and ignore the rest.

Part 3

Many People believe that:  They can transfer property to a family member to “protect it from bankruptcy.”

If there is one thing that makes a bankruptcy case more expensive, it is self help exemption planning by a potential client.  The conversation usually starts off great, the case should be a breeze, the debtor is under median income and has plenty of exemption room, then the bombshell lands.  “I put my car in my brother’s name last week.  So, I don’t have to list that, right?”  This is when I start hoping and praying that he’s a procrastinator and hasn’t filed the title with the State.

Attempts like this to hide assets have a special name in bankruptcy law.  They are called Fraudulent Conveyances.  And trustees have a special way of dealing with fraudulent conveyances.  It’s called avoidance powers.  They can undo the transfer, seize the asset, sell the asset, and pay Citibank 10 cents for every dollar you owe them and line their pockets with fees and commissions to boot.

Then you have those debtors who know a little bit about this, so they “sell” the car to their brother-in-law for $1.00.  Still a fraudulent conveyance!  Same reaction by the trustee, the money dance.

What’s worse still, are those people who find out what they did was wrong, and don’t want to pay someone to help them fix their mistake or wait the time required to fix it.  So what do they do?  They go to a new lawyer.  Hire him to file their bankruptcy case and just neglect to mention it.  So, let me tell you a little secret.  Trustees get paid a pittance for every case they oversee.  Their real income comes from discovering assets.  One of the best and fairly easy assets for them to discover is transferred deeded and titled property.  You know the State of Maryland actually keeps track of these things!

So, do me this favor.  If you’re trying to pull one over on the courts.  You’ve been to see a few bankruptcy attorneys in Baltimore or Baltimore County and you know what not to tell the new one, don’t come see me.  I don’t want to have to represent a client that lies to me.  If you’ve made a mistake in trying to do some pre-petition planning on your own, come see me.  Let’s figure out what we need to do to limit or eliminate the damage.  These things do not have to be the end of the world.

At the Grafton Firm, we’ve been helping people file bankruptcy in Baltimore and around the country for years.  I won’t say we’ve seen everything, because every time I say that I find a new and more bizarre situation.  We have seen a lot, though.

About the Author:  William Grafton is a Maryland Bankruptcy Lawyer and Co-Owner of the Grafton Firm, LLC.  He has written, lectured, and educated on credit related topics for nearly 10 years and is happy to be bringing his expertise to the Baltimore Metro area.

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