Bankruptcy law requries full disclosure
Bankruptcy law requires full disclosure of recent transactions to family members or other “insiders.” If you made a gift or sold something to a family member within past two years, you must disclose it. The trustee may move to set aside or void that gift/sale or hire an expert to determine if the sale was at fair value. Some clients decide that they do not want to provide this information and request dismissal of the case. Unfortunately, in a Ch. 7 bankruptcy, dismissal is a matter that must be brought before the judge and the trustee may object to dismissal. More often than not, the bankruptcy judges are denying motions to dismiss these Ch.7 cases. If you are considering filing for bankruptcy and have made such a gift or completed a sale to a family member, keep in mind this two year rule.