Can I Transfer My Car Title To My Spouse Before Filing For Bankruptcy?

In the State of Florida, there is a $5,000 wildcard exemption that is most often used to keep a vehicle during filing for bankruptcy.  However, to use this exemption, the car needs to be titled in the name of the person filing for bankruptcy.  The $4,000 applies to the equity on the car (this is usually determined based on its bluebook value if there are no payments being made), not how much the car was purchased for at the time of purchase. 

The general rule in filing for a bankruptcy is that you shouldn’t make any transfer of property—be it a car or any other property of worth—to a third party, relative or spouse prior to filing.  According to the bankruptcy court, this is a fraudulent conveyance, and can end up costing you much more than you bargained for if the bankruptcy trustee finds out—and they will!  Any title transfer can be discovered through a simple public record search and will immediately raise red flags to the court overseeing your bankruptcy. 

If a trustee determines that property has been fraudulently conveyed prior to your bankruptcy filing, he or she could seize that property and you could lose the exemption that would have allowed you to potentially keep the property in the first place.  In addition, you might lose the right to file bankruptcy if the court determines that you were attempting to file under fraudulent circumstances.

We at Bankruptcy Law Clinic advise that you consult with one of our Florida bankruptcy attorneys before making any decision about your property before filing.  We are familiar with all the red flags that could cause your bankruptcy case to be denied and will be able to instruct you on the best way to make sure you can keep a vehicle or piece of property you want to keep that doesn’t involve fraudulent conveyance.