Definition of Transfer

[confusedinfl]

Can anyone help me out with that is a definition of a transfer? I thought this was when you had transferred property to another individual.

I transferred funds from one account in my name to another account in my name. Should this have been reported as a transfer on my bankruptcy Chapter 7 schedules. My attorney knew about this and it was not on there so I am assuming not.

The tricky part comes when one more piece of information is added. Because I have moved out of the country back to my home country for an indefinite amount of time I had to transfer the funds through a family member's account. You have to be there in person in my home country to open a bank account and you have to be there in person in the US to initiate an international wire transfer. Because I can't be in two places at one time the funds went into a family member's account and were then transferred into my new account when I was able to get there and open it in person.

The creditor is trying to have the case dismissed based upon this.

[HHM]

So, the money is now in "your" account, in a foreign country, correct? You may have mentioned in your other post on this...BUT, did you list the money on your petition schedules. If not you will have problems, and you need to amend your schedules ASAP, if you did list it, you might be ok.

If the money is outside the ability of this creditor or the bankruptcy trustee to execute upon, then yes, it is a transfer...and probably an improper transfer. However, whether it is beyond the ability of a creditor to execute upon is probably too complex a question to be addressed in this forum.

However, as a general matter, I would think that transferring money overseas before filing BK would probably be considered an improper transfer. Look at it this way, if I owned a relatively new $90,000 Audi and parked it in Nicaragua right before filing BK in the US, I would be hiding an asset. The same basic analogy holds in your case.

However, I think the three material issues will be (1) did you list the money on your BK schedules, (2) how long did the money stay in the relatives accounts and was it in the relatives account when you filed BK, and (3) whether a creditor could readily execute upon the funds in the foreign country. A lesser, but still important issue, would be the timeline...when was the judgment entered against you, when did you transfer the money, when did you file BK.

[confusedinfl]

Response

It was not listed because there are were no funds remaining from that transfer at the time of filing. These were funds that were transferred to assist me in re-establishing myself back here. In addition, I had some financial commitments to settle in the US such as IRS taxes and paying off a large credit card balance. I needed the funds where I was in order to be able to initiate those settlements. Remember also at this time I had not even considered filing bankruptcy and was trying to sell my house. When the house didn't sell I had to also transfer $15K back to cover the mortgage payments for several more months. All in all, of the $60K transferred, $50K went to settle these financial affairs and the remaining $10K I used to re-establish myself here and for living expenses. It doesn't take long before it is all gone. I have detailed accounting down to the penny and evidence of every transaction to back this up.

So....no, nothing was on the schedule because as far as I was concerned this was in the ordinary course of my financial affairs and except for the few weeks the funds were in this other account it was a transfer from an account in my name TO account in my name...not to another individual.

[confusedinfl]

Further Response

Some of the money was transferred before the judgment was entered against me. This was at the time I was confident that I would win the case. Some of the money was transferred after but this was home equity that was withdrawn and which I had been advised was exempt from the judgment under my homestead. I got legal advise at that time, I did have the declaration of homestead filed, and all sources told me that even if the equity was withdrawn that it was still exempt if used for living expenses.

Some of the transferred funds were from an IRA, another exempt asset. Those funds were going to be transferred into a retirement account here...again an exempt to exempt transfer....again, I had been advised nothing was improper about this transfer. As events transpired I was running low on cash to live on and I ended up using that cash for living expenses prior to filing bankruptcy.

I filed at the end of July and all these transactions occurred in Feb, Mar and April, all over 90 days prior to the date of filing.

[HHM]

Ok, it sounds like you had a bunch of different legal advice so take my comments for what it is worth...however...

The timeline is still pretty tight here...note, being outside the 90 day deadline ONLY means the transfer is not "presumed" to be fraudulent...but a creditor or the trustee can still claim fraud and present evidence to that effect, once you fall outside of the 90 days, then the creditor or trustee must prove fraud. Also, it stretches credibility on the fact that things changed so drastically in the relatively short period of 6 months, from everything being fine to Bankruptcy.

You have some transmutation issues...meaning
Regarding the home equity...There may be some variation in state law, but, you typically only get to continue to claim the home equity exemption on funds pulled out of house if you reasonably intend that money to be used for (1) improvements or (2) the purchase of a new primary residence. But since you got legal advice that living expenses counted, very well; but in most states that is not the case...once the equity is converted to cash, the burden falls on YOU to prove the intended use, and living expenses are typically NOT considered an exempt use.

The IRA transfer...since you DIDN'T roll it over and kept it in cash and used it for livings expenses, a talented attorney can probably get around the alleged exempt to exempt transfer because the funds, WERE, IN FACT, transmuted from an exempt IRA to non-exempt cash. Certainly, at the time you made the transfer and intended to roll it over, every attorney would tell you it is exempt, but since you actually DIDN'T do that, I don't think you will be able to maintain the exemption.

I think a relatively talented lawyer on the opposing side can probably make a descent showing...and without knowing more (i..e the nature of the claims underlying the judgment and the whole history), I'd give you 60 in favor of you, and 40 against, but perhaps 50/50.

Plus, I think you are going in under the credibility gun here, it just doesn't look good (regardless of your good intentions) when someone facing a judgment, over the course of three months, liquidates all their assets and moves them overseas and then declares BK.

But I could be wrong, I am probably presenting the worst case scenario and reality is probably more favorable to you.

[confusedinfl]

Response

Thank you so much for all your input. A couple of last questions if that is ok.

You didn't mention the fact that all the transferred funds with the exception of a relatively small amount, probably about $5K, was used to settle liabilities, most of them secured, mortgage and taxes. I can understand that the transfer might come under question if funds were still in an account and they hadn't been listed on the schedules. How can they argue fraud when all my exempt assets were liquidated in order to settle liabilities? I could understand if they were trying to argue a preference but surely not fraud. Does that come into it at all?

What would they have to do to prove fraud? The primary reason that I needed to come back here was because of my parent's health. My Mom is being treated for cancer and both parents have recently had hip replacement surgery and they needed me here. My business was wrapped up because the company I represented changed their reseller policy resulting in my no longer being able to represent their product which took away 80% of my income. So yes, it does look bad but will the judge take into account all of these other facts? I also went through a divorce at this time and between all that and the legal battle who would have wanted to remain living there?

[confusedinfl]

Judgment

The nature of the claim was a judgment which originated in my suing a former business partner. She got an attorney, escalated the case out of control, I couldn't afford an attorney, got some REALLY bad breaks throughout the case, original judgment was about $4K. Supplemental judgment was for all her attorney fees and was about $45K. Obviously I had no control over running these up and I had absolutely no idea that it would be that much. Throughout Dec and Jan while I was wrapping everything up and beginning my relocation I was 100% confident that I would win still and therefore all these decisions were not made with the thought of ever facing a judgment. In Feb, Mar and Apr while I was settling all my financial affairs I was still exploring any and all avenues for appeal. With no money though and no income there really isn't too much you can do.

[CindyLou]

I think you answered your own question in the first post that you put up about this. You said your attorney felt it was in "your normal course of business" for your circumstances. And if I remember correctly, this is an prior business partner objecting for emotional reasons mainly. I say you go with what your attorney says. ANYONE included on your BK can object; that doesn't mean they will win.

[HHM]

The nature of the claim was a judgment which originated in my suing a former business partner. She got an attorney, escalated the case out of control, I couldn't afford an attorney, got some REALLY bad breaks throughout the case, original judgment was about $4K. Supplemental judgment was for all her attorney fees and was about $45K. Obviously I had no control over running these up and I had absolutely no idea that it would be that much. Throughout Dec and Jan while I was wrapping everything up and beginning my relocation I was 100% confident that I would win still and therefore all these decisions were not made with the thought of ever facing a judgment. In Feb, Mar and Apr while I was settling all my financial affairs I was still exploring any and all avenues for appeal. With no money though and no income there really isn't too much you can do.

I understand that, but what were the underlying claims. Breach of contract, Fraud, etc. What specifically was the lawsuit about?