Whether you are considering filing for bankruptcy or you have already filed bankruptcy and your case has not closed yet, do not make any major purchases or sales before consulting with your attorney. State and federal laws protect certain property and assets from your creditors during your bankruptcy; however, making major purchases or selling your property could ruin that protection.
Once your case has been filed, it is best to not even consider selling any of your property whatsoever until after you have attended your hearing and the trustee has issued what we call a Report of No Distribution. A Report of No Distribution means that the trustee has reviewed your assets and property and believes that after all applicable laws are applied, there is nothing left to distribute to your creditors. Until such time as that report has been issued, your property is subject to being turned over to the trustee for distribution of your creditors. That is a rare occurrence in most cases; nonetheless it is a process that should be respected.
Depending on the situation, the bankruptcy trustee could ask for the sold property to be turned over to the bankruptcy estate. How inconvenient and embarrassing would that be to have to tell the person you just sold property to that the bankruptcy trustee is sending someone over to repossess their new purchase?
Additionally, depending on the conditions of the sale, it could be deemed a fraudulent transfer in the eyes of the Bankruptcy Court. A quick review with your attorney before making such a sale could avoid you being accused of fraud in the course of your bankruptcy.
Having said that, we understand that life happens and you may be in a position where you find it necessary to sell your car, for instance. Justcontact your bankruptcy attorney as soon as you begin to consider selling any of your property. A quick conversation with your attorney could help you avoid a lot of problems.