Worried that I've committed fraud prior to filing..

[LostNFound]

I know..."fraud" is a bad word and I'm scared that I'm going to be in big trouble.

I know that some of you have been through this and it's on my mind so much, I am struggling with waiting to talk to the lawyer (March 8th). Anyone have an opinion on this?

(1) We sold our camper to my MOTHER in Jan 2009. It was worth about $7900, but we sold it for $4000. (We had $3300 in hail damage that we never repaired) and there was a leak that they repaired. SO that's how we arrived at that figure.

(2) We sold a house/rental in Dec 2009. We sold it for fair market value which only left us with $800 at closing. We paid $400 of it back to the tenant that was renting and then purchased the home from us. So, all totaled, we made $400 after the sale.

I've read that the trustee can go back 2 years and look for any transfer of titles and I'm freaking out!! My mother is already disappointed in us for getting into this situation "she PAYS her bills". grrrrrhhh.... But If I bring her into this, I'm going to have a nervous break down. She will FLIP OUT on me.
We just sold one of our properties because we are drowning in mortgage debt. And, we returned a property bought on contract (Lost our $10K down) in Sept 2009.
We also have 3 of 5 properties still up for sale. I just listed the 4th property 2 days ago.

Is this bad? Am I going to be in HUGE trouble for all of this? Is it better if we try to somehow hold off filing for a while? I don't know what to think!!!

Oh, and FYI...I did disclose all of this to the lawyer we will be speaking with on Mar 8th. I put it in the worksheet I filled out. I just wanted some opinions before I go...seems like such a long time to find something out!

[Dst1]

With all the properties up for grabs this sounds complicated but there is NOTHING in what you wrote that says fraud.

[LostNFound]

What about selling property to FAMILY? From what I've read, any transfers of title will be looked at and especially if it's to any family member. And, in the state of Iowa, they can go back up to 2 years?

We sold a camper and a house....Wouldn't that be fraud and especially when other family members are involved? I wish there was a way to know what the trustee would do. I just hate the idea of my mother getting involved. ugghhh....

[momofthree]

According to my attorney, as long as you sell it for fair market value, you can sell to family without any issues. We asked if we could sell our truck to the in-laws a few WEEKS before filing and he said it was fine as long as we got fair market value for it. We're going chapter 13 though, don't know if that makes any difference at all, but I wouldn't think so.

Also, fraud means that you willfully intended to deceive or deliberately trick to gain an advantage. Neither of these sales sounds like fraud. You should be fine!

[BobMango]

What about selling property to FAMILY? From what I've read, any transfers of title will be looked at and especially if it's to any family member. And, in the state of Iowa, they can go back up to 2 years?

We sold a camper and a house....Wouldn't that be fraud and especially when other family members are involved? I wish there was a way to know what the trustee would do. I just hate the idea of my mother getting involved. ugghhh....

I think you are fine. Your explanation for how you arrived at the sale price on the camper sounds reasonable to me and I'm sure the trustee will see it the same way.

I sold several assets before filing and the trustee did ask my relationship to the purchaser and how much I sold them for. I would guess that transfers to family will be more closely scrutinized, but I think you'll be fine.

[LostNFound]

Ok, one more question....and I apologize, but I'm just trying to think ahead.

How do I PROVE that my mother paid for this? Do you think the deposit into my bank about that time is enough? She actually wrote me 2 checks for $2000 about 1 month apart. I don't have those, but I know we would have deposited into our bank account. Again, not trying to get ahead of myself, but I don't want her involved at all. It seems like her "understanding" of our financial situation wavers from sympathetic to angry.

I'm also wondering if I should get documents from the insurance company to prove the hail damage?

Maybe the trustee doesn't care about going that in depth...but I want to be prepared and we have SO MUCH to worry about. With 5 rental properties...I can only imagine how long this is going to take to finalize.

[DeadManCrawling]

When you are in the time before filing BK, it is sometimes ok to sell things "under duress" for not quite full market value. It is expected that you might "fire sale" some things, even to family. As long as there is an exchange of reasonable value, a term that varies in application, you are fine. Had you sold a 8k camper for 80 dollars, that would cause trouble.

Your deposit record is probably enough to back up the transaction. A copy of the check might be better.

Nothing you wrote looks fraudulent to me.

[nerves]

LNF - I don't think the house will be an issue. The camper probably won't be either as long as you have documentation what you sold it for, the estimate on the hail damage, etc. Your lawyer will probably be able to state a strong rebutal if it is questioned as long as you are up front with him. The trustee may ask a few questions about it and move on since it was at fair market value or very close. The amount of work to mess with it probably won't be worth their time due to the value. Will you be filing in Northern or Southern district? We filed in the Northern district and I don't recall the trustee even asking if we had any insider transactions, etc. I was surprised the items above exemption weren't even questioned. Our case has been discharged (02/17) and closed (02/25). The trustee asked for a copy of our 2009 tax return and it appears at this point she doesn't have any interest in it. Our lawyer will send her a copy and we will see what happens.

[LostNFound]

We will be filing in the Northern District. I have contacted about 4 attorneys at this point. 2 of them were definitely NOT going to work for me. It's surprising how crabby they can be!
We have narrowed the margin to 2 attorneys that we are considering. However, one is in Iowa City (which is hours away from us) and one has a couple of offices but the main one is in Waterloo. We are meeting with the one from Iowa City because he required less documentation up front to at least meet with him. The other attorney is requesting every single shred of documentation that you could imagine and I don't have it all together yet. Honestly, the paperwork is intimidating and I finally got sick of waiting.

But if you have any recommendations, I'd be willing to listen!!!

[nerves]

LNF - I sent you a PM the other night in regards to one of your other threads - I will send you another with a lawyers name.

[backtoschool]

I don't think fraud is involved. But, if you get a trustee that is really aggressive, he/she might try to get some money back from your mother for the camper. A "fraudulent conveyance" just means that you sold it to your mother for under market value in the last 2 years before filing. The trustee will look at the book value of the camper and then may go after your mother for the difference. Intent is difficult to prove on either side, so usually in these situations the discrepancy between market value and what your mother paid, is declared an asset, and you negotiate with the trustee. If the book value of the camper is more than what your mother paid for it that is what will be questioned. The key here will be if the hail damage really lowered the book value of the camper. Some trustee's will accept that as an explanation, and some will try to get the difference in values.

I think you can push back on the trustee though and show evidence of hail damage, etc. But that would end up on bankruptcy court in front of the judge. Property sales to family members are red flags for trustees unfortunately, and I disagree with some of the posters on this thread that the trustee will not consider the sale of the camper a "fraudulent conveyance". I think there is a chance that the trustee will go after your mother for the difference between market value of the camper and the what she paid for the camper.

Just my opinion....

[Flamingo]

The situation is what it is and you will need to bring it all to the attention of your attorney. Also realize that it seems your intent was to sell the items since you were "drowning in mortgage debt" which would probably show that it was not your intent to sell the items for a profit prior to filing bankruptcy. Did you use the money from these sales to pay bills? Can you show where the money went? All that will be important...best of luck to you...

[LostNFound]

Nothing has seemed to go my way for about the last year, so I'm expecting that this will be a hang up for us.

I don't actually remember what we did with the money. I suppose we lived on it? I don't know because I didn't know I was supposed to keep track of it at that point. I'm going to have to go back through the bills and try to figure it out. I'm sure that the trustee will be able to see our bank accounts and that would most definitely show something? But I will do my best to put the pieces together. I know we haven't made any major purchases in the last year (aside from my camera equipment, but I've used money that I made from photography to do that and nothing else).

As for the profit from the house we sold....ha ha ha....We walked away from the table with $800 and we paid the tenant that lived there her deposit back of $400. So...not too much to worry about there!

I did tell the attorney all of this. But after reading comments here, I'm wondering if waiting until the end of summer would be better for us? That gives us 1.5 yrs from the sale of that camper. I'm not worried about the trustee asking me questions or looking into how we spent the money. We've been drowning in mortgage debt for so long, I'm sure it went to that. However (and I know I'm repeating myself), my BK is a very private matter and I would rather that no one knows about it until it's in the papers. And by that, I mean, My mother! I am not up to dealing with that right now...

For anyone that has gone through BK already, I'm sure you realize that I'm going to be ok. But it seems like such a BIG hill to climb. It's taken a lot time for me to get to the point of having ENOUGH of the fight and I want it all to go away. I'm anxious over the possibility that we will be a HUGE asset case and this will take a LONG time. We have too many assets...and w/5 houses....ugggh....this is going to be nightmare that won't be over for another 6-8 months (I'm guessing) and that's if we get started now!

[LostNFound]

Ok. Here's an update.
I just asked my hubby what he did with the money from the camper sale to my mother. And, in my opinion, this isn't going to look good for us.

He said he used it to pay a company that was supposed to help with our credit card debt. Like I've mentioned earlier, we stopped paying our credit cards in Feb 2009. Well, we signed with a company that was going to help us with that debt (100K). I say "supposed" to help us because it hasn't worked out so well. Thats a whole new thread, so I won't get into that.

But, from what I've read, I'm worrying again because we sold our camper to get money to pay for signing with a now "bogus" credit card repair thing! Ugghhh.....

YES, I am going to tell the attorney about it in more detail. But I'm posting it here because hopefully I'll have something GOOD to add to all of this worry.

[backtoschool]

Ok. Here's an update.
I just asked my hubby what he did with the money from the camper sale to my mother. And, in my opinion, this isn't going to look good for us.

He said he used it to pay a company that was supposed to help with our credit card debt. Like I've mentioned earlier, we stopped paying our credit cards in Feb 2009. Well, we signed with a company that was going to help us with that debt (100K). I say "supposed" to help us because it hasn't worked out so well. Thats a whole new thread, so I won't get into that.

But, from what I've read, I'm worrying again because we sold our camper to get money to pay for signing with a now "bogus" credit card repair thing! Ugghhh.....

YES, I am going to tell the attorney about it in more detail. But I'm posting it here because hopefully I'll have something GOOD to add to all of this worry.

I don't think what you spent the camper money matters so much in regards to a "fraudulent conveyance". Many people try credit repair before filing for bankruptcy. That will not look out of the ordinary to a trustee. What matters is that you sold the camper for less than fair market value. What things will boil down to, is what the trustee considers fair market value for the camper. If the trustee accepts that there is $3,000 of hail damage on the camper and that that hail damage made the camper worth $3,000 less than book value, then the trustee will not go after your mother for the money. If the trustee does not believe that the hail damage made the camper worth $3,000 less, then the trustee will try to get some money out of your mother.

Trustees only make $60 per case on non-asset cases. They are trained to look for transfers to family members so that they can convert the case to an asset case and make some money. I was made an asset case because I wrote two $500 checks to my mother in a year to help her with her expenses. The trustee went after my mother for the money. If you want to avoid any chance of the trustee going after your mother, you would have to wait two years from the sale of the camper to file.