The people most likely to overlook omitted transfers when filing for Chapter 7 bankruptcy are those who don’t realize that transfers of money or property before filing — even gifts, repayments, or helping family — must be disclosed. Many of these actions feel “normal” or unrelated to bankruptcy, but trustees specifically look back at 90 days to 2 years (or more) to uncover potential fraudulent or preferential transfers.
Other types of omissions typically fall into four key categories: accounts, property, transfers, and income.
Omitted Transfers (Giving Away or Moving Assets)
| Example | Why People Omit It | Risk |
|---|---|---|
| Transferring a car title to a family member “for safekeeping” within 1–2 years of filing | “It’s still in the family” | Trustee can reverse the transfer (“clawback”) |
| Depositing money into a child or spouse’s account | “It’s just to help them” | May be seen as asset shielding |
| Paying off a loan to a friend or relative just before filing | “I owed them” | This is called a “preferential payment” — can be clawed back |
| Selling property for less than fair value (e.g., a $10,000 car for $1,000) | “They were helping me out” | Trustee may unwind the sale and seize the asset |
| Putting assets into a trust or business entity | “It’s protected now” | If done recently, may be fraudulent conveyance |
| Large cash withdrawals | “I wanted cash on hand” | Raises suspicion; trustee may demand explanation or trace funds |
Here’s who is most likely to miss these disclosures, why it happens, and what they commonly forget:
1. Parents and Family Caregivers
Who:
- Parents helping adult children financially
- Adult children managing finances for aging parents
- Grandparents giving gifts to grandkids
Why They Omit Transfers:
- “It was just a family gift”
- “They needed help with school or rent”
- “I’ve always sent them money — it’s normal”
Common Transfers Missed:
- Giving a car to a child or co-signing title
- Transferring money to help with tuition, rent, or a wedding
- Putting a child on a joint account (or vice versa)
2. Small Business Owners / Self-Employed Individuals
Who:
- Contractors, consultants, freelancers
- Anyone with a sole proprietorship or side business
Why They Omit Transfers:
- “It was a business expense”
- “I reimbursed myself”
- “The business isn’t separate from me”
Common Transfers Missed:
- Payments to vendors or contractors (especially relatives)
- Transfers between personal and business accounts
- Selling equipment, tools, or inventory under market value
3. People in Financial Freefall Before Filing
Who:
- Individuals behind on bills or collections
- Those borrowing from family or friends
- People trying to protect or “shuffle” money/assets
Why They Omit Transfers:
- “I needed to pay them back before it got worse”
- “I didn’t want to lose my car/house/etc.”
- “I was just trying to survive”
Common Transfers Missed:
- Repaying loans to family/friends right before filing
- Transferring property into someone else’s name for safekeeping
- Cash withdrawals or large ATM activity
4. DIY / Pro Se Filers Without Legal Guidance
Who:
- People filing bankruptcy without an attorney
- Those using software or online forms with limited prompts
Why They Omit Transfers:
- “I didn’t know that counted”
- “The form didn’t ask that specifically”
- “I didn’t think I had to include stuff I no longer own”
Common Transfers Missed:
- Sales on Facebook Marketplace or Craigslist
- Transfers of money between family members
- Gifting valuables or collectibles
5. Recent Divorcees or People Separating Assets
Who:
- Divorcing couples dividing property
- People transferring ownership before or after separation
Why They Omit Transfers:
- “It was part of the divorce”
- “We didn’t go through the court — we just agreed”
- “I gave them the car so they could move out”
Common Transfers Missed:
- Giving up equity in a home, car, or business
- Taking one asset in exchange for another
- Moving money between ex-spouses without documentation
Why This Matters
- Trustees look back 1–2 years for property transfers and payments — and longer in some fraud cases
- Preferential transfers (to insiders) within 1 year can be clawed back
- Fraudulent conveyances can lead to denial of discharge or criminal penalties
- Even innocent mistakes can delay your case or cause loss of assets
This is exactly why working with a bankruptcy attorney like me is so important.
I’ll help you understand whether Chapter 7 or Chapter 13 is the right path for your situation — and make sure you don’t overlook critical details like past transfers that could jeopardize your case. My job is to protect you from costly assumptions and ensure your bankruptcy is done right the first time.
