Will the Trustee consider this fraud?????

[Mad]

1. In 2004, my parents, the business and property owners, transferred there business, which they owned for 15 years, to me for nothing. They required that I pay $2000/month rent

2. In 2008, due to mounting debt, I couldn't continue making the $2000/rent. My parents take over the business. They allowed me to continue working, however, I wasn't the operator/owner anymore

3. I plan on filing for bankruptcy in a few months.

I didn't make any money from this place because I didn't buy the business to begin with, I never owned any assets (had about $7K worth of assets). I couldn't hold on to the place since it wasn't profitable enough to even pay the rent. So my parents took back the business. I'm unable to find work so they still let me work at the restaurant, while I'm going to school.

Could this possibly be considered a fradulent case?

Should I be worried?

[Flamingo]

Your post is very similar to another posting recently on here asking a very similar question. Was there hard, signed paperwork used to transfer this business back and forth? Either way, it appears it would be in your parents' names; who signed the paperwork for those 4 years as owners and there could be an issue if the property was never correctly tranferred and any tax or other issues arise. I would certainly mention the situation to your attorney when you have your consultation.

[StartingOver08]

1. In 2004, my parents, the business and property owners, transferred there business, which they owned for 15 years, to me for nothing. They required that I pay $2000/month rent
This $2000 rent is probably included on your past tax returns as a business expense. The business is considered an asset of yours and by transferring it back to your parents, they are considered insiders. The lookback period is minimum one year, but the Trustees get 4 yrs tax returns so your business rent will show. This will be an issue for the Trustees.
2. In 2008, due to mounting debt, I couldn't continue making the $2000/rent. My parents take over the business. They allowed me to continue working, however, I wasn't the operator/owner anymoreYou will need to get an excellent attorney to help you with this. You will probably need to show the transfer of the business TO you and FROM you in order for it to not be considered abuse. You may in fact have to wait, but this is a good attorney question.

3. I plan on filing for bankruptcy in a few months. A few months may be to soon just from the little bit you have posted.

I didn't make any money from this place because I didn't buy the business to begin with, I never owned any assets (had about $7K worth of assets). I couldn't hold on to the place since it wasn't profitable enough to even pay the rent. So my parents took back the business. I'm unable to find work so they still let me work at the restaurant, while I'm going to school.

Could this possibly be considered a fradulent case?

Should I be worried?

Please post what you are planning to file BK on (the debt, assets and the income). With this transaction, it makes your case very difficult.

[Mad]

Please post what you are planning to file BK on (the debt, assets and the income). With this transaction, it makes your case very difficult.

I have $60K in CC debt, roughly 40% is business related debt. I have no assets. The business had little assets, around $7K total. My income during the past 4 years has averaged around $10K/year. I'm married and my wife is expecting in June.

[StartingOver08]

It sounds like you can do a personal CH 7 BK. BUT, you will need to include the all the business statements as well.

My concern is that "$7k of business assets you HAD". You turned those assets over to your parents when you transferred the business back to them recently, right? Well the trustee will consider that an insider transaction.

Take a look at this (link below for further clarification):

Transferring certain assets is a fraudulent act if you transfer them with actual intent to hinder, delay, or defraud any creditor. Be careful about transferring assets prior to filing bankruptcy as the transfer could be considered fraudulent and the transfer voided by the court. Fraudulent Transfer Acts: (see definitions)

Transfers made by a debtor are fraudulent, whether the creditor's claim arose before or after the transfer was made, if the debtor made the transfer with actual intent to hinder, delay, or defraud any creditor.

When determining actual intent, consideration may be given, among other factors, to whether you:

Transferred the asset to an insider;
Retained possession or control of the property transferred after the transfer;
Disclosed or concealed the transfer;
Were sued or threatened with suit before the transfer;
Transferred all of your substantial assets;
Absconded (departed secretly);
Removed or concealed assets;
Received value reasonably equivalent to the value of the asset transferred;
Were insolvent or became insolvent shortly after the transfer was made;
Transferred the asset shortly before or shortly after a substantial debt was incurred; and
Transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor

http://www.filing-bankruptcy-form.com/fradulent-transfers.html

Again, you would need to speak to an attorney, but just from what you have posted it certainly looks like an insider transaction.

[Mad]

It sounds like you can do a personal CH 7 BK. BUT, you will need to include the all the business statements as well.

My concern is that "$7k of business assets you HAD". You turned those assets over to your parents when you transferred the business back to them recently, right? Well the trustee will consider that an insider transaction.

Take a look at this (link below for further clarification):

Transferring certain assets is a fraudulent act if you transfer them with actual intent to hinder, delay, or defraud any creditor. Be careful about transferring assets prior to filing bankruptcy as the transfer could be considered fraudulent and the transfer voided by the court. Fraudulent Transfer Acts: (see definitions)

Transfers made by a debtor are fraudulent, whether the creditor's claim arose before or after the transfer was made, if the debtor made the transfer with actual intent to hinder, delay, or defraud any creditor.

When determining actual intent, consideration may be given, among other factors, to whether you:

Transferred the asset to an insider;
Retained possession or control of the property transferred after the transfer;
Disclosed or concealed the transfer;
Were sued or threatened with suit before the transfer;
Transferred all of your substantial assets;
Absconded (departed secretly);
Removed or concealed assets;
Received value reasonably equivalent to the value of the asset transferred;
Were insolvent or became insolvent shortly after the transfer was made;
Transferred the asset shortly before or shortly after a substantial debt was incurred; and
Transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor

http://www.filing-bankruptcy-form.com/fradulent-transfers.html

Again, you would need to speak to an attorney, but just from what you have posted it certainly looks like an insider transaction.

How is it an insider transaction? My parents were the business landlords. I couldn't afford to continue paying rent to them so they took over the business. Remember, I never bought the assets to begin with; it belonged to them.

[StartingOver08]

That is why you need a good attorney. I only posted as to what the Trustee looks at - and believe me, they are looking out for the creditor and not looking out for you.