What to do about a car and bankruptcy?

My mother is going to be retiring soon and thinking about filing bankruptcy. She has a 4 year old car with 30,000 miles. She owes $5,000. We had it appraised and it was appraised at $12,000. She is afraid of losing her car since there is quite a bit of equity in it. Can she sell me the car (for what she owes on it, $5,000) and put the car in my name and then I sell her my daughter’s car (old car with lots of miles so it would be sold (or given to her) and we put that car in her name. Is that allowed? We do not want to do anything fraudulent but we want her to be able to keep her car. We just know they will take the car since it is worth quite a bit of money.

Asked on February 25, 2013 under Bankruptcy Law, Ohio


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

Transfers made months before a bankruptcy will be scrutinized or examined closely--especially when they are with family members, and expecially when they are for less than fair market value--and may be set aside as an attempted fraud on creditors. It is therefore likely that you would not be able to do what you describe, since this is the sort of transaction that the courts and creditors are on the look-out for.

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