Brad was having financial difficulties and thought bankruptcy might be in his future.He transferred his sports car to his brother with the agreement that if he didn't file for bankruptcy within the next 18 months,his brother would return the car to him.Brad did file for bankruptcy in 10 months.The bankruptcy trustee can void the transfer and bring the car back into Brad's estate for the purpose of providing assets for Brad's creditors.

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This is a classic example of a preferential transfer, where a debtor attempts to transfer assets out of their estate to avoid having to surrender them to creditors. The transfer of the sports car to Brad's brother was made within the 18-month period before filing bankruptcy, and therefore the bankruptcy trustee can void the transfer and bring the car back into Brad's estate to provide assets for his creditors.

Brad Was Having Financial Difficulties and Thought Bankruptcy Might Be