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Bankrupt dentist allowed to transfer condo before petition

Not every Florida resident who files for Chapter 13 bankruptcy will qualify. Some debtors will have to file for Chapter 7 bankruptcy because they do not earn enough income to fulfill the obligations in a Chapter 13 repayment plan. The Bankruptcy Appellate Panel for the 9th Circuit heard a case involving a dentist who had two Chapter 13 cases dismissed before he filed for Chapter 7 bankruptcy.

After the dentist filed for Chapter 13 bankruptcy for the first time, he transferred a condominium he owned into a trust using a quitclaim deed. His first and second Chapter 13 bankruptcy petitions were dismissed. The debtor then filed a Chapter 7 bankruptcy petition more than 12 months after the transfer of his condominium.

Before the dentist filed for bankruptcy for the first time, one of his former patients had sued him for malpractice and obtained a court order for repayment of damages. When the dentist obtained a discharge under Chapter 7, the former patient disputed the discharge in court. The former patient alleged that the dentist’s transfer of his condominium into a trust was done in an effort to delay, hinder or defraud his creditors. However, the lower court and the appellate court both ruled in favor of the dentist because the transfer occurred more than one year after his Chapter 7 bankruptcy filing.

Most people who file for Chapter 13 or Chapter 7 bankruptcy owe money to several different creditors. An lawyer may be able to help a debtor to prepare for a bankruptcy petition and determine what debts will be eligible for discharge if the bankruptcy petition is approved.

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