Question about vehicle?

[NoTomatoCan]

Once you have some experience under your belt you will see that the job of a Chapter 7 Trustee is to find assets. Remember, the Trustee is not the friend of the debtor. He/she has a fiduciary duty to the creditors and, also makes a few bucks on the way to meeting that duty.

Enough said.

Not to step in front of some good old fashioned flame throwing, but does it matter that this is for a Chapter 13 (not Chapter 7) where trustees are less inclined to raise such issues since the debtor is typically paying something back? Yes, I understand that even a CH13 trustee can raise such an issue, just probably less inclined to than a CH7 trusteee.

Also (not that I would ever recommend not being truthful to the trustee) but doesn't whether the OP has an equitable interest in the vehicle come down to some unwritten agreement or future intent? In other words, who knows why he was making the vehicle payment. Maybe it was just to help out dear old dad, not because he eventually was going to be given the car.

I mean, I have helped pay my mom's house payment before when she was struggling, but never expected that it meant I had an equitable interest in her home.

[Pandora]

Pandora,

I suppose we can agree to disagree but maybe you should look at

1. Fraudulent Conveyance:

In re Phillips 379 B.R. 765 (Bankr. N.D.Ill. 2007) which is just one of many, many cases discussing the issue.

2. Equitable ownership: quote from an "unpublished decision":

"IN RE: AMANDA LE; aka AMANDA LE TRAN; fdba DIAMOND CHINESE RESTAURANT; dba OCEAN ONE II M/V FKA THANH SANG II M/V; fdba PRINCESS ALENA M/V; fdba ASHLEY LE TRAN II M/V, VINH Q TRAN; dba OCEAN ONE M/V FKA NIKKIE N II M/V; dba COUNTRY CLUB NAILS, Chapter 12, Debtor(s).

Case No: 07-34244.

United States Bankruptcy Court, S.D. Texas, Houston Division.

November 21, 2007.

MEMORANDUM OPINION

MARVIN ISGUR, Bankruptcy Judge.

Debtors claim an equitable interest in two shrimping vessels. Debtors are not the vessels' legal owners. However, Debtors have made all payments on the vessels and receive all income from the vessels. The Court holds that Debtors have an equitable interest in the vessels and that the equitable interest is property of the estate."

__________________________________________________ ________

Interestingly you will be hard pressed to find cases dealing with minor dollars that constitute the bulk of the issues. Why you might ask? Because most consumers cannot afford to fight the fight and either settle or do not defend and allow the Trustee to obtain a judgment.

In response to the following name calling:

"I think you're either playing attorney or you're not a very good one that would suck your clients dry."

Please grow up. Until you have been an attorney dealing with these very issues for over 2 decades, try to keep an open mind. Once you have some experience under your belt you will see that the job of a Chapter 7 Trustee is to find assets. Remember, the Trustee is not the friend of the debtor. He/she has a fiduciary duty to the creditors and, also makes a few bucks on the way to meeting that duty.

Enough said.

Oh my lord -

Fraudulent conveyance = The illegal transfer of property to another party in order to defer, hinder or defraud a creditor. In order to be found guilty of fraudulent conveyance, it must be proven that the accused's intention for transferring the property was to put it out of reach of a known creditor.

The OP is neither trying to put something out of reach nor doing anything fraudulent as it was NEVER in their LEGAL POSSESSION to begin with.

Equitable ownership = is the car held in trust? NOPE - dad can decide NOT to give it to the son later, at any time of his choosing. Son cannot sell the vehicle nor do anything else with the vehicle - its not in his name at all - no insurance, no title - nada. Sorry... wont wash. IF however the son was the one required to carry the insurance, make all necessary repair work, and all burdens for the vehicle - THEN I believe your case of "equitable ownership" would come into play, however that is not the case. Ownership and all its legal and equitable rights remain with dad. Proving it in court is going to be hard pressed at best.

Avoidance Powers of a Trustee - there is no lien nor property to avoid in the OP's possession so avoidance powers dont come into play. The transactions subject to the trustee's "avoidance powers" are called voidable transfers and liens.

Explain to us - great wise one - exactly WHAT the trustee is going to "void" here? The father's right to his own vehicle?

Gimme a damn break. Quote whatever you want - the law is the law, you cant dig through it and say "oh well..but your father SAID he was gonna give it to you later... so you have to include it NOW in your filing as property or its going to be construed as fraudulent...."



Get off your high horse and be HONEST with the OP - even you yourself contradict what you write - one minute its "It will happen" the next its "If the trustee looks hard enough..he MAY find it".

Are you a trustee by chance?

[Pandora]

....
I mean, I have helped pay my mom's house payment before when she was struggling, but never expected that it meant I had an equitable interest in her home.

EXACTLY.... so I guess everyone that EVER helped a family member, friend, roomate, etc - in 2 years prior to filing BK when things were good for them before hard times hit - are considered fraudulent and equitable owners in everything... ?

Uh.. no...

[despritfreya]

Very astute:

My original response to the OP was:

"The correct answer is that you have an equitable interest in the vehicle to the extent you paid for it, regardless of how the title reads. If nothing else, the fact that your father plans on transferring title to you once it is paid for is proof of this. It needs to be listed in Schedule B and, if it is not exempt, needs to be accounted for to your creditors through the Plan."

The thread them morphed into something bigger lending to an "explanation" of what the issue are. Remember, in a Chapter 13 you must pay your unsecured creditors what they would have received if you had filed a Chapter 7.

There are two issues. If the OP does not have an equitable interest in the vehicle then he has a transfer of $$$ to dad. Therefore, either the non-exempt interest in the vehicle or the recovery of the $$$ must be accounted for.

Your example of once in a while helping your mom is not the issue. OP admits he made most, if not all of the payments on the vehicle and very little is left owing. That is indicative of ownership or a recoverable conveyance.

Of course, OP can ignore the issue. You are correct, it is less likely that a Chapter 13 Trustee will pick up on it. However, failing to disclose, disclose, disclose is a federal crime and the resulting consequences are not worth the risk - no matter how small the risk may be.

Lastly, you did not "step in front of some good old fashioned flame throwing". It appears you have a good grasp of the issues and have brought this discussion full circle back to the original post. Thank you.

[LadyInTheRed]

EXACTLY.... so I guess everyone that EVER helped a family member, friend, roomate, etc - in 2 years prior to filing BK when things were good for them before hard times hit - are considered fraudulent and equitable owners in everything... ?

Uh.. no...

You are mistaken. As far as the law is concerned, those gifts are considered fraudulent transfers. USC 548(a)(1) the title of which is "Fraudulent transfers and obligations", provides, in part:

(1) The trustee may avoid any transfer (including any transfer to or for the benefit of an insider under an employment contract) of an interest of the debtor in property, or any obligation (including any obligation to or for the benefit of an insider under an employment contract) incurred by the debtor, that was made or incurred on or within 2 years before the date of the filing of the petition, if the debtor voluntarily or involuntarily—
(A) made such transfer or incurred such obligation with actual intent to hinder, delay, or defraud any entity to which the debtor was or became, on or after the date that such transfer was made or such obligation was incurred, indebted; or
(B)
(i) received less than a reasonably equivalent value in exchange for such transfer or obligation; and
(ii)
(I) was insolvent on the date that such transfer was made or such obligation was incurred, or became insolvent as a result of such transfer or obligation;
(II) was engaged in business or a transaction, or was about to engage in business or a transaction, for which any property remaining with the debtor was an unreasonably small capital;
(III) intended to incur, or believed that the debtor would incur, debts that would be beyond the debtor’s ability to pay as such debts matured; or
(IV) made such transfer to or for the benefit of an insider, or incurred such obligation to or for the benefit of an insider, under an employment contract and not in the ordinary course of business.

This is why question 10 of the Statmenet of Financial Affairs that is filed with every bankruptcy petition requires the debtor to

List all other property, other than property transferred in the ordinary course of the business or financial affairs of
the debtor, transferred either absolutely or as security within two years immediately preceding the commencement of
this case

Also, question 7 of the Statement of Financial Affairs requires the debtor to

List all gifts or charitable contributions made within one year immediately preceding the commencement of this case
except ordinary and usual gifts to family members aggregating less than $200 in value per individual family member
and charitable contributions aggregating less than $100 per recipient

As despritfreya points out, if subparagraph (1)(b)(i) excludes the payments of the car loan from being a fraudulent transfer because of an oral agreement between the OP and his father, then the OP owns an interest in the car that should be reported as an asset.

[despritfreya]

To: LadyInTheRed

Exactly. Thank you.

By the way, I just wrapped up a case where the 7 Trustee attempted to recover a piddly $1,200.00 from my client's elderly father. Trusteee tried to "extort" money from my client. We said "no - go sue dad and try to collect. He has nothing but Social Security so good luck". Trustee closed the case as a "no asset" case.

[Pandora]

There are several issues going on - that have inferred fraudulence on the OP's part - there was no fraudulent intent to defraud here, period.

I fully understand the issue of paying the bill and it being viewed as "Gift monies" to the OP's father - I understood that from the beginning - however that was and is not the issue I was, nor continued to, direct upon. MY issue was that it has been beaten to death that it can be construed as fraudulent conveyance/transfer - when clearly there was no intent to defraud on the OP's behalf. Just because Dad says he planned on giving it to him doesnt mean dad will - you're basing it on the assumpion, and you know what happens when you assume. Most people dont plan or know they're going to end up in bankruptcy... but - for shits and giggles, lets go with that concept for a moment...

If that was the case - then clearly every person on here that ever PLANNED their BK could be brought up on charges of fraud - as its been posted and beaten to death about how to plan your BK. Along those lines, not divulging you have $ set aside from not paying your bills, but doing a "cash and stash" as MANY MANY on here have done - can also be construed as fraud - yet it is not. Did they divulge that $ was setting aside? We dont know... but I have serious doubts as to anyone thats ever filed BK that has not had something they've hidden...come on! Pull up posts - read through them - and you will read the same thing over and over again.

As far as "being a lawyer with over 20 years.." - well - lets use that as an example for your own postings despirtfreya, shall we? Lets go back to your very first post to Lrprn - and your arrogance in stating that "You do not understand" or better yet to me "You clearly do not understand" or lets take it even further - how about to NoTomatoCan ..."Very astute". Do you really not view your addressing people by talking down to them as menial and beneath you? Excuse me, but thats exactly how it reads - to me - I wont speak for anyone else because I cannot, however from someone reading this forum, it sure seems clear from my perspective. There are SEVERAL other lawyers on this forum that wouldnt dream of speaking to members on here in the manner you have - you could have addressed things differently, but did you? No - you decided to pull out the "I'm an attorney - you're not" card - and why? To make yourself feel superior like most attorneys do? Yep.

Perhaps if you spoke to people in a manner that didnt put on airs then you'd get a better response. Learn the lesson my friend.... dont dish out what you cannot take.

FYI - its the internet - I could say I was an attorney too - and pull up laws all day long - but I dont. Take it for what you will...

Nothing more to add here. Have a good day.

[LadyInTheRed]

Nobody said the OP intended to defraud anyone. Intent is not required by the bankruptcy code. There is a presumption UNDER THE LAW that a transfer to an insider without consideration within 2 years of filing BK is a fraudulent transfer. The consequence of the fraudulent transfer is not that the OP is going to be prosecuted for fraud. It's that the trustee can void the transfer. The alternative is that the OP has an interest in the vehicle. He is the only one here who knows whether there is an agreement between him and his father that he will get the car in return for making the payments. He needs to discuss with a lawyer how the transactions should be reported, but there is no question that they need to be reported.

People come here to get good advice. Telling them to hide something because nobody is likely to find out is not good advice. I haven't hidden anything in my BK and don't believe everybody does. The consequence of lying on your petition is that your case can be dismissed with prejudice and your debts will be forever dischargeable. It just isn't worth the risk. You can also be prosecuted for perjury if you lie on your petition and/or at the 341. "Cash and stash" can get you in trouble if anyone finds out. If you have cash on the day you file BK, you must report it on your petition. Otherwise, you have committed perjury. Even if everybody does it and doesn't get caught, it doesn't make it legal. It is possible to get caught and is not worth the risk and I do not often see people advise that somebody should do that without somebody else coming along and pointing out that hiding assets is against the law and should not be done. It is legal to plan your BK, but that doesn't mean you can hide transactions and assets as part of that planning. I planned my bankruptcy without doing anything that could be considered fraud. It's all right there on my petition.

The purpose of this forum is to answer questions about BK procedures and law. Telling people that it's okay to hide assets and lie on their petition (omission is a lie) because they aren't likely to get caught is not only bad advice, but it is against the rules of the forum.

You may not like the law and the term "fraudulent transfer", but that doesn't change the fact that it's the law.

[Pandora]

Get it straight - I never said to do anything illegal - I never advocated to hide any assets. I stated that people HAVE posted on here that they have removed monies from bank accounts and held it - i.e,. not paid the mortgage, credit cards, etc - and were saving it for other uses - such as rent for future.

Not once did I advocate anything illegal - nor would I - dont put words in my mouth.

[LadyInTheRed]

Get it straight - I never said to do anything illegal - I never advocated to hide any assets. I stated that people HAVE posted on here that they have removed monies from bank accounts and held it - i.e,. not paid the mortgage, credit cards, etc - and were saving it for other uses - such as rent for future.

Not once did I advocate anything illegal - nor would I - dont put words in my mouth.

I'm not putting any words in to your mouth and didn't say that you advocated doing something illegal. You took issue with the advice given and the fact that "it has been beaten to death that it can be construed as fraudulent conveyance/transfer - when clearly there was no intent to defraud on the OP's behalfand use examples of people posting about hiding cash" In response, I'm explaining why it is important to tell people what the law is, regardless of what other people may have done and perhaps gotten away with it.

The possibility that many people may have hidden things in their BK is not a good arguement for not advising people that the law considers certain transfers "fraudulent transfer" and that they may have a problem with certain transactions they engaged in, regarldess of what their intention was at the time of the transfer.

[lrprn]

I'll probably be sorry I'm asking this, but here goes.

Explain to me again how a father buying a car with the father's name being the sole signer on the loan and the adult filer paying the car payments automatically makes the filer a presumed bk abuser trying to hide an asset? That the filer could have been helping his dad out financially by making the car payments for him is just as logical an interpretation as the 'he's trying to hide an asset so he's committing bk fraud" one.

This filer has no legal financial connection to the car....none, zero, nada....and never has. The car loan was *never* the filer's debt. The filer has *never* had any legal connection to the car whatsoever. What grounds would a trustee use to say the filer intended to hide a car asset he never owned and never had any legal financial responsibility for?

Is this one of those "camel through the eye of the needle" legal oddities? Or perhaps it's one local trustee's broad legal interpretation so that he/she can gather up as many $$ as possible to give to the creditors in any way possible?

[LadyInTheRed]

I'll probably be sorry I'm asking this, but here goes.

Explain to me again how a father buying a car with the father's name being the sole signer on the loan and the adult filer paying the car payments automatically makes the filer a presumed bk abuser trying to hide an asset? That the filer could have been helping his dad out financially by making the car payments for him is just as logical an interpretation as the 'he's trying to hide an asset so he's committing bk fraud" one.

This filer has no legal financial connection to the car....none, zero, nada....and never has. The car loan was *never* the filer's debt. The filer has *never* had any legal connection to the car whatsoever. What grounds would a trustee use to say the filer intended to hide a car asset he never owned and never had any legal financial responsibility for?

Is this one of those "camel through the eye of the needle" legal oddities? Or perhaps it's one local trustee's broad legal interpretation so that he/she can gather up as many $$ as possible to give to the creditors in any way possible?

I don't think anybody said that there is a presumption that the car was an asset or the fact the he paid his father's car loan leads to a presumption that he is hiding an asset.

We don't really have the facts to know if the debtor has an interest in the car. The OP did say "My dad has always planned on giving me the car when it's payed off which should be in a few months." That suggested that making the payments on the car was in exchange for an interest in the car in which case the interest in the car should be listed as an asset.

If his payments were not in exchange for an interest in the car or for some other equivalent value, that's where a "presumption" comes into play. In that case, the car payments were for the benefit of an insider and are presumed to be fraudulent transfers under USC Section 548(a)(1), regardless of the debtor's good intentions to help is father out.

So, there is either an asset or gifts that need to reported in the petition in order to avoid committing perjury.

Now, it is possible the presumption of a fraudulent transfer is a rebutable presumption. I don't know. If so, and the trustee decided to void the transfer, you would have to either convince the trustee that you have the evidence to rebut the presumption or take the argument to the judge and let him decide.

Whether the son has a legal interest in the vehicle depends on whether he and his father had an agreement to that affect and whether that agreement is enforceable under state law.

[woeisme]

I think that the poster said he/she drives the car periodically. So could making the payments (in the past) be considered in same category as car rental or lease? Payment for use, which is a consumable. The poster got value (use of car) so not illegally trying to convey $, just paying for something he got use out of, but does not have any ownership of property, just as I don't own a car I rented from Budget RentaCar, but not fraud for me to have paid to rent a car prior to my bk, right?