So, you’re thinking about filing bankruptcy and heard somewhere that when you file, you lose all your property. Instead of letting the bankruptcy court sell your things, you decide to start giving your property away.
Let’s clear up a few things: first, you won’t lose all your property when you file bankruptcy. Colorado law makes much of your personal property exempt from sale when you file bankruptcy.
Second, property that is given away in anticipation of bankruptcy remains in your bankruptcy estate. That means the trustee can go after that property and take it back. If you think you can get away with hiding property from the bankruptcy court, think again. You could face serious consequences for trying to do so, such as having your case dismissed or being prosecuted for lying on your bankruptcy petition.
If you have given away property in the year prior to filing bankruptcy, you need to tell your attorney so that he can disclose it on your petition.