Asset Protection Provided by Denver Bankruptcy Lawyer Christopher German
There is a doctrine that prevents pre-bankruptcy fraudulent transfers. The Bankruptcy Code disallows pre-filing payments of debts to favored unsecured creditors, such as relatives, business partners or even a trust or other estate planning device to the detriment of the remaining unsecured creditors.
However, the following use of funds in anticipation of bankruptcy is permissible:
- Paying down tax debt to the IRS or Colorado State Dept. of Revenue,
- Paying down a mortgage or car loan up to Colorado exemption limit,
- Making annual contributions to an ERISA qualified retirement account, such as a 401(k) or IRA
- Purchasing health, term life insurance or disability insurance, or
- Liquidating non-exempt property such as a boat or RV in order to make past due payments, also known as curing arrears.