Can a bankruptcy trustee look back to a sale of an asset prior to filing for bankruptcy?

Answers.com > Wiki Answers > Categories > Business & Finance > Personal Finance > Money Management > Loans > Auto Loans and Financing > Can a bankruptcy trustee look back to a sale of an asset prior to filing for bankruptcy?
Answer:
Yes. And, if the sale of the asset is deemed fraudulent, or just unfair, the trustee can seek to "avoid" (i.e. cancel) the sale and drag the asset back into the bankruptcy estate.

For example, if the debtor sells his 2009 Chevy Corvette for $10 to his dad and then files bankruptcy, you can bet the trustee will seek to avoid that transfer as a fraudulent transfer and the trustee will grab the Corvette.

Or, if someone sells the debtor a 1974 Ford Pinto with no transmission for $1,000,000 before the bankruptcy is filed, again the trustee will likely avoid the sale and go get the money back since the debtor was treated so unfairly.

Please note that nothing in this posting or in any other posting constitutes legal advice; this is simply my understanding of the facts and law, which I do not warrant, and I am not suggesting any course of action or inaction to any person. Speak to a lawyer for specific advice. If you have any questions, please refer to a lawyer in your jurisdiction. Thanks!
First answer by RossLawOffice.com. Last edit by RossLawOffice.com. Contributor trust: 226 [recommend contributorrecommended]. Question popularity: 1 [recommend question].

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