“Should I transfer property to myself and my wife and then file bankruptcy?” The answer to that question is definitely NO. This will be a transfer within a year before bankruptcy with the intent to defraud, hinder, or delay your creditors. When this happens the court will deny a discharge if the trustee or some other creditor brings this to the court’s attention in an adversary proceeding. Debtors have to disclose transfers made within a year before the bankruptcy in their schedules.

Why would a debtor try to transfer property to himself and his wife right before the bankruptcy? The answer is: if the debtor lives in a state that honors tenancy by the entireties, which is a special way to hold property jointly between spouses, then none of the creditors of either spouse alone will be able to seize and sell that property in or out of bankruptcy because the property is owned in a special, asset-protected way. (IMPORTANT EXCEPTION: if debts are owned jointly by both spouses, this property is not protected)

But because the debtor moved the property from a condition where creditors could seize it to a condition where they couldn’t seize it shortly before the bankruptcy, the Bankruptcy Court will find that transfer to be fraudulent to creditors and bar the discharge. That’s why it’s very important if a debtor wants to do pre-bankruptcy planning that they are very careful and prudent and consider the consequences if the planning is not done with the correct timing.