Alex files a petition for bankruptcy under Chapter 7. He owes $2.37 million to assorted creditors. Two months before filing, he sold his beach house, which was valued at $600,000, to his brother Jonah for $150,000. If the trustee objects to the sale, then it is most likely that:

The trustee can stop Alex from selling the house and that automatically prevent the transfer of ownership from Alex to his brother Jonah.

Explanation:

The trustee will refute the transfer and take back the house as part of Alex's estate. The reason for this is not far fetched, Alex actions in this regards is tantamount to an abuse of chapter 7 of the Bankruptcy law. In that case, the trustees can use the "means test" to determine his actions and can stop the transfer of ownership to his brother, Jonah.

Because of people like Alex, US trustees has achieved a regulatory system most creditor friendly commentators have consistently espoused, which is a formal means test for Chapter 7. (The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005) has clarified this area of concern.

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