transferring assets

[junker]

what would be an acceptable timeframe for transferring an asset, relating to a bk, or possible judement? there has to be a time that wouldnot be considered fraudulent transfer. 6months prior to a bk? or 1 year? how about possibility of being sued for judgement? if you transfer before any lawsuit would that be acceptable. or should it be before you default on anything at all?

[BigJohn]

What would you like to transfer?

[junker]

a car with too much value? or maybe quick deed a house? a boat?

[ansky0007]

They will look back 12 months... They might be able to look futher for an inside transfer.

[epiphany]

Technically anytime you transfer an asset knowing that you are going to be filing BK, it is fraud and you can get caught.

It would be irresponsible of me to give you any more of an answer than that.

But I do wish you luck,


ep

[justbroke]

Yeah, big asset transfers will be looked at with all due suspicion. They can be considered fraudulent, especially within 6 months to a year of filing.

If you're really trying to hide the assets, you may not be successful, even waiting a year, as the look back period is 2 years and in limited circumstances, can go back further.

You may even honestly transfer something in the few years to a relative, as payment for something, but the Trustee may seek to avoid the transfer as an insider preference.

If you really need to move exempt and non-exempt assets around, then you need good counseling from an experienced BK Attorney who knows about pre-Bankruptcy planning.

I can't imagine anything more embarrassing than the Trustee successfully avoiding the transfer of property to a relative...

[fltoo]

You are getting terms all mixed up here. I had the hardest time with understanding all these terms when I first started looking into BK, also.

A preferential payment has a look back period (when the trustee can "avoid") is what, 90 days?, I am not really even sure because it wasn't a concern of mine. This is paying one creditor over another.

But, an "insider pref payment" is paying a relative, business associate, etc. over another creditor and has a look back period of ONE YEAR.

A "fraudulent transfer" is transferring an asset and has a look back period of TWO YEARS. Has nothing to do with being "insider".

Keep in mind that you can transfer by sale any asset for full market value. It is only fraudulent if you are selling for less or giving away the asset just to get the asset out of your name.

The catch....if the trustee suspects fraud, he can extend the look back period according to what his state allows.

[magyar123]

what would be an acceptable timeframe for transferring an asset, relating to a bk, or possible judement? there has to be a time that wouldnot be considered fraudulent transfer. 6months prior to a bk? or 1 year? how about possibility of being sued for judgement? if you transfer before any lawsuit would that be acceptable. or should it be before you default on anything at all?

As the last two respondents mentioned transferring assetts can become an issue if you file bankruptcy. Potential suits resulting in judgments are completely different. Creditors with judgments seeking to rob you will first try to get your wages garnished and your bank accounts frozen.

[allavdj]

A simple answer to your question is:

The court (trustee) can look back as far as they please and look atwhatever they want. It's basically a crap shoot as to whether they give you a hard time or not.

The catch is, if the trustee finds one little detail out of place, it will probably trigger a deeper look into your past and the deeper they go, the more they'll find.

[GoingDown]

They rarely look back more than a year or two in most cases.



The thing to keep in mind is that they are not God, they only know what you tell them. If you transferred the asset and waited a few years before filing bk, and then didn't mention it, they probably would never know about it.



As far as judgment creditors go, unless a court specifically tells you can't transfer an asset (which is VERY RARE), you can do whatever you want to do.

[relief13035]

So what's the worst that can happen?

In August, our son moved from Southern California to Seattle for a job. We gave him a 2004 Honda Civic because he needed a reliable car. This car has a salvage title (but was restored to "like new"). We disclosed this to our attorney. He valued it as $2000 since it has the salvage title. When we gave our son the gift we had never even entertained the idea of filing BK. But by October it was apparent that we were not going to be able to hold on any longer. We remained current on ALL debts until Oct. 1.

If the trustee has a problem with us giving our son a car, can we just pay it back? I have no intention of taking the car away from our son.

[treehugger1]

Everyone needs to keep in mind that not all states follow the same exemption standards as the federal law.

Many states have two statutes:

1) Transfers with respect to bankruptcy

2) Uniform Fraudulent Transfer Laws

Here is an example. Suppose you give your mother-in-law $5000 or a $3000 (in equity) auto to hold for you while not paying current creditors. Is this a fraudulent transfer? If you are not filing BK and the cash or asset is protected as an exempt asset, then this is not a fraudulent transfer of assets. You can do with what you want with exempt assets and cash, regardless of whether or not you are being sued. The assets or cash must, however, be exempt. Exempt cash assets can be the same as what one receives after a wage garnishment under judgment. I just read my states fraudulent transfer act and it clearly staes that a "cash" transfer refers to only non-exempt cash. So, in my state the remaining 75% of ungarnished wages (cash) is exempt. If you take part of that exempt cash and buy an exempt vehicle and give it to your brother, is the car exempt or considered a "transfer?" See the murkiness here.

In BK, such transfers might be considered preferential to an insider. I think in such cases in some states only non-exempt asset transfer can be considered. I'm no expert, but there can be conflicts between state exemptions and federal BK exemptions. Some states use federal exemptions, but many other states have exemptions above and beyond the federal minimum exemptions. When I was first looking into BK in Oregon, I met with several different legal counsels and I was told not to worry about "what I had in a bank account." Oregon law provides for bank accounts holding up to $7500 of exempt funds. Are these funds still exempt under federal BK laws? I don't know, but states can allow for greater BK exemptions than the feds allow. I would guess in BK, it comes down to a decision between your attorney and the trustee, and a well-argued interpretation of what is a transfer, exempt, etc.

I think the state-by-state-by-federal line is blurry, and eventually it could come down to a legal fight or a US BK district court decision.

[junker]

thanks everyone for the answers. it seems like a big gray area, is the INTENT to file bk. although many probably give it a lot of thought. the INTENT would have to be proven. such as visiting bk attorneys a year befoe you actually file would show intent. but if you just are thinking to yourself. wow, if things dont turn around within the next few months for me, i am going be in deep @@@@ and then sell something it would probably be ok. as Big Boy said selling it to survive is ok. 20 years ago i filed bk. i also had just taken a loan for about 5k in which i made one payment before i saw a bk lawyer. the lawyer said it wouldnt be a problem because i hadnt shown intent to file. but i did show intent to pay by making one payment. it went through fine, nobody even showed up for hearing. so i guess INTENT to file, is the big question when moving something out of your name.

[epiphany]

So what's the worst that can happen?

In August, our son moved from Southern California to Seattle for a job. We gave him a 2004 Honda Civic because he needed a reliable car. This car has a salvage title (but was restored to "like new"). We disclosed this to our attorney. He valued it as $2000 since it has the salvage title. When we gave our son the gift we had never even entertained the idea of filing BK. But by October it was apparent that we were not going to be able to hold on any longer. We remained current on ALL debts until Oct. 1.

If the trustee has a problem with us giving our son a car, can we just pay it back? I have no intention of taking the car away from our son.

What did your lawyer say when you told him of the car gift? Did he think it was going to be a problem? If he was putting a value on it, did he exempt it? If it's exempted, the question is mute.

But let's pretend that the car is not exempt. As Junker just pointed out, intent is everything and I would not think that this would raise an issue but if it did and the trustee did want the car, I am sure he would rather have the cash than to go through the hassle of selling it--I don't think anyone is going to take the car away from your son unless the value was considerably understated.

ep

[HHM]

OK, now on to judgments, this is a totally different animal. So long as you have not been notified, meaning a letter or creditor saying they are going to sue you. It does not have to be a formal summons. Just once you are notified in writing via a complaint that legal action "may" be started against you, you now can not move or transfer assets. Any transfers or sales can be undone by the judge. Definitely once you have been served with a legal action against you you are not under a microscope for the duration of the proceeding. But until that time you are put on notice again, you are free to do with as you please with your own property.

More of a side note, but that is not entirely accurate. The event that triggers the "intent to avoid creditors" issue is the "default", not any notice of collection, but that is beside the point.

So long as you sell property for fair market value and there is no lien against that property, you have nothing to worry about. But once you start quit claiming deed to your home to your spouse or giving your car to your son, you will have problems both in the judgment context and BK context. Keep in mind, "intent" is a fuzy word here. For BK, intent merely means you are insolvent at the time of the transfer, (not that you actually intended to defraud).