Sacramento Bankruptcy: Can Trusts protect Assets or Income during Bankruptcy?

Some Sacramento BK clients have tried to protect their assets by creating a trust and transferring assets to that trust.  A trust is defined as an instrument by which a person gives some of his assets to another individual or group of individuals.  The idea is that creditors would then have more difficulty in collecting on these assets and in the meantime the person can continue to collect interest by reserving a life estate.  Then the person can transfer the interest to a third party to try to shelter it from creditors by keeping it secret.  

Newly instituted bankruptcy reform addresses this strategy.  Your Sacramento Trustee can stop you from collecting interest on any properties which are put into trusts within 10 years of filing for bankruptcy if they are found to be part of a self-settled trust.  Self-settled trusts are defined as ones created for the grantor’s personal benefit.  Likewise, your Sacramento Trustee can prevent you from collecting interest earned by deliberately defrauding creditors.  To learn more about the latest developments in bankruptcy law, call Sagaria Law of Sacramento for your consultation.

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