Divorce, CH7, and automobile title question

[2Bshinyandnew]

[StartingOver08]

My concern here is that the automobile has no lien and you are considering this exchange just before BK.

Read this link from the middle district of fl conserning contemporaneous exchanges prior to BK (its a business, but the framework is there to help determine your liability in this particular transaction). http://pacer.flmb.uscourts.gov/pdf-new/54215953.pdf

Where you have a problem is the fact that your ex-husband (soon to be) is an insider and the lookback period is 12 months. It also seems that contemporary exchange is primary used in business filings, not consumer CH 7 filings.

Read this Bankrupcy overview for insight. I believe that the transfer would be avoided by the Trustee, IMO. http://www.fedbar.org/bank-jan07.pdf

Your BK attorney will know what to do. Have you also asked your divorce attorney if the BK can overide the divorce decree?

[nervousss]

I have nothing significant to add, but I just wanted to say that I hope everything works out well for you. You are starting a new life! A lot of changes at once. Good luck

[StartingOver08]

2B, this is not exactly on point because it is with a judgement creditor rather than a spouse, but maybe it illustrates what can happen to the vehicle. In a way, your ex husband becomes a insider creditor (???) at the time of the divorce. Take a look at this one:



See this link: http://www.bankruptcyorlando.com/court_decisions/

[2Bshinyandnew]

There is so much involved.

I'm wondering, if the trustee can undo the transfer, does that mean the trustee must undo the entire Marital Settlement agreement, including the "new value" (the car for the value of the bank account which is actually a ROTH IRA, whose value is now approximately equal to the car)?

If the trustee cannot undo preferential actions in the ordinary course of business, is a Marital Settlement Agreement that contains standard distributions of asset something that is considered an "ordinary course of business" transaction?

[2Bshinyandnew]

OK. I think the right question is...Can a Bankruptcy Trustee set aside a divorce settlement, and so far I found this:

http://www.brownejacobson.com/publications/publications/bulletins/trustee_fraud_or_collusion.aspx

Trustee must show fraud or collusion to set aside divorce settlement

7 December 2007
Only where a trustee in bankruptcy can show fraud or collusion on the part of divorcing spouses can a property adjustment order made in contested proceedings be set aside as a transaction at an undervalue. This is the result of a Court of Appeal judgment this week.

Section 339 of the Insolvency Act 1986 ("the Act") allows a trustee in bankruptcy to challenge and set aside the transfer of property by a bankrupt made previously to his or her former spouse if that transfer was made at an undervalue. How to establish undervalue, however, has been the subject of debate in the courts. The Act requires that in order for the transaction to be deemed an undervalue there had to have been either no consideration provided by the recipient, or any consideration that was given must have been significantly less than the value of the property transferred "in money or money's worth".

So, in my settlement if the value of the ROTH IRA is equal to or more than the car, there is no undervalue. If I were to sign the car over to my ex and get nothing n return, that is fraud.

If I keep the car and the ROTH IRA, my soon to be ex can (rightfully) complain that the agreement is not equitable. If I keep the car and he gets the IRA, I lose twice, and that is not equitable either. The logical thing to do is he gets the car and I get the IRA, but if I do that and then file BK later, is that fraud?

The above link is in the UK, OOPS

[2Bshinyandnew]

http://floridaassetprotection.blogs.com/alperlaw/fraudulent_conveyances/

Fraudulent Divorce: Can A Property Settlement Agreement Be Reversed As Creditor Fraud?I have not seen any Florida cases setting aside a divorce as a creditor fraud.


posted by Jonathan Alper, asset protection and bankruptcy attorney, Orlando, Florida

October 7, 2008 in Fraudulent Conveyances | Permalink | Comments (0) | TrackBack