Selling properties or any other goods, having a pendant debt can be a crime, which might imply prison for up to 4 years. Therefore, one must be careful.

However, selling properties or other goods before a legal procedure is started, resulting from what is owed, is not always a crime.

When is it a crime?

In order for it to be considered as a crime of fraudulent bankruptcy (asset stripping), the following requirements need to be there:

1. To owe money.
2. To sell, donate, mortgage or dispose of the properties or others of the debtor in any way.
3. When the debtor cannot pay what is owed.
4. When the debtor sells with the intention of the creditor not receiving any money.

And if I sell a property, but still have others? 

In this case there will be no crime, whenever the debt can be paid with the other properties or with the rest of the assets.

How is it possible to know whether the debtor had sold with the intention of not paying to the creditor?

Here we are dealing with the most complicated subject concerning the requirements of crime of fraudulent bankruptcy (asset stripping). As it is impossible to know the subjective intention of a third party, a conclusion may be reached based on indications, such as:

1. If the sale is chronologically near to any proceedings or debt demand.
2. If the sale is carried out to any friend or relative.
3. If the sale is carried out for a very low price or it is directly donated.
4. If in spite of selling the property one continues to live in it , as an owner or a beneficial owner…

Be careful if the sale is done to a child

One must be careful with this, as we can turn the child, who wants to help his father or mother to come out of a debt, into an accessory, that is, he would have committed the same crime as his father or mother.

In short, one can sell or donate a property if there is a debt, but one must act very cautiously not to commit a crime of fraudulent bankruptcy (asset stripping).

This post is also available in: Spanish Catalan