Just wondering... § 548 allows for the voiding of the transfer of property in the case of fraudulent conveyance only if bankruptcy was applied for within 2 years of the transfer date, it appears. In this case, it was 2 years and 1 month later. Am I missing something in the statue that would allow for voiding the transfer in this case? It wasn't a trust or anything, just transfer of property from one individual to another. Would appreciate any insight, Thanks!
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The only other thing that might change that 2 year time frame is as follows:
§ 548
(e) (1) In addition to any transfer that the trustee may otherwise avoid, the trustee may avoid any transfer of an interest of the debtor in property that was made on or within 10 years before the date of the filing of the petition, if—
(A) such transfer was made to a self-settled trust or similar device;
(B) such transfer was by the debtor;
(C) the debtor is a beneficiary of such trust or similar device; and
(D) the debtor made such transfer with actual intent to hinder, delay, or defraud any entity to which the debtor was or became, on or after the date that such transfer was made, indebted.Filed pro se, made it through the 341, discharged, Closed!!!
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Med,
548 deals with the Trustee's ability to avoid the fraudulent conveyance of property by the Debtor. It is not applicable in your friend's case. Your friend transferred property in 2007. The State Court, in 2007, determined that it was a fraudulent conveyance under State (not Bankruptcy) law. Go back to my 2nd post at the other Forum for the case cite which discusses 548.
Des.Comment
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Thanks! Yes, I caught that, but it's not any kind of trust, as I said. Just a plain old transfer of title.Comment
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Hi, Des. Yes, I know, but one of the defenses originally sought in the case was to void the original transfer as is was "fraudulent". The denial of the homestead exemption was based on the claim that a lien had attached when title was not in his name (not true), but if the entire transfer could be voided, it would be moot. It would also help in another part of that judgment enjoining against further transfer. All this is because of course the plain fact that the FT judgment exists, even though wrongly, and is what is balling up the entire case. We're working up a statement of issues on appeal, so are backtracking through the case. We will also put in a motion to vacate the original FT judgment, then appeal from that, but we have to work on what all was potentially wrong in this case first. So, am wondering if this is viable.Comment
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Stop right there. . .Originally posted by medievalmagg View Post
If you recall, I misstated the law when I original said that once transferred, if recovered under State law, the homestead is lost. AdjustedJack corrected me and I acknowledged the mistake BUT I cited to a bk case that holds that if an otherwise exempt asset is recovered under the Trustee's avoiding powers, the exemption is lost (and this I know from experience in numerous cases I have handled). Therefore, if the conveyance is avoided in a bk under 548, the debtor DOES NOT get the benefit of an exemption. Again, you are barking up the wrong tree.
Des.Comment
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Okay, I'm getting thoroughly confused. The only thing I'm trying to do is follow his lawyer's original route. (For purposes of the appeal while concurrently looking at other possible arguments). HER claim was this: " By operation of the Fraudulent Conveyance Judgment the Debtor’s attempted transfer of the property in February of 2007 is void. A void transaction is treated as having never taken place; all parties are returned to status quo ante. Because the February 2007 transfer is void, Debtor has held continuous title to, and residence in, the real property at issue. As such the property is exempt." She goes on to say that the Creditors are as much bound by the FT judgment as the debtor, and must also accept the consequences, one being the voidability of transfer of the title, and quotes some caselaw. I gather you don't feel this is a successful approach? Remember, the creditor's had posed several arguments why he shouldn't either get his homestead, avoid the lien, or whatever... shooting down all potential defenses.Comment
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That might have been the argument but the Judge correctly did not buy it.Originally posted by medievalmagg View Post
Forget case law, public policy is not going to allow one who fraudulently conveys property to claim that such a conveyance is "void" and therefore "poof" never happened and the property always remained in their name. If that were the case then the Uniform Fraudulent Transfer Act would have no meaning to creditors seeking to go after property wrongfully transferred out of their reach.
As the Judge stated, "The bankruptcy court (in the Connecticut case) rejected that argument and held that 'having transferred title to the residence prepetition to the daughter, the debtors retained no ownership interest in the residence on the date of their bankruptcy petition'". The Judge in your friend's case went on to state, "The cases cited by the Debtor are not to the contrary. Those case hold that the transfer may be ignored by the creditor, which is not the same as holding that the transfer can be ignored by the transferor".
Your friend transferred property and there is a State Court Judgment from 2007 that finds the conveyance was fraudulent under the State Statute. It is not the act of the transfer that is void. What is void is the effect of the transfer (moving property out of your friend's name so that the creditor could not get to it). In fact, the State Court Judge enjoined any further transfers leaving the title to the property in the transferee's name. The transferee, in violation of that Court Order, deeded the property back to your friend.
A good rule of thumb: One who acts in a fraudulent way and gets caught is not going to be able to argue "well since I acted in a fraudulent manner and the property has been recovered by the creditor I was trying to defraud then I get to keep the property". Just not going to happen in my lifetime, your lifetime or your friend's lifetime.
Des.Comment
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I don't understand the point of citing case law then, if it's never going to do you or your case any good. Isn't the point to find a precedent that supports a particular point? And, if there is caselaw that does that, how can the position just be "forget the case law"? Aren't they supposed to be the building blocks of your argument? Isn't case law supposed to be a distillation of public policy for that matter?? How did it get there if not?
The point of voiding title transfers of supposedly a fraudulent nature is to restore the situation to what it was originally in order for the CREDITOR (mind you) to take what steps he would have been able to satisfy his claim had the transfer never happened. What could possibly be more equitable than that? To insist on it being otherwise is to demand MORE than the original access to collection. All that voiding the transfer would do would be to put the situation back as it was, as the legislators intended by that provision. If the creditors had fair means to collect their judgment prior to transfer then they also do afterwards, they are not harmed in anyway be restoring the situation to its previous standing.
You are the one with the experience, Des, so presumably know how it goes most of the time. I just naively assume that the rule of law is what works, and is supposed to. But really, it's all about what the perception is instead, and that the actual law may as well be trashed because it just doesn't matter at all. But, since it's been over 2 years, I guess none of it makes any difference, does it? Except now I'm thoroughly depressed by the perception that the BAP will have already decided in advance, won't bother rethinking despite any type of case law I might present, and that nothing anyone does makes a difference anyway.Comment
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Did not mean to depress you but your friend (and, presumably you) should know by now that appeals rarely succeed. He has a long history of appealing the various State court decisions (litigation relating to this creditor and others) and, as far as I can tell, never "won" an appeal. As to the "rule of law", I believe the Judge looked at the cases and determined that their facts/holdings actually supported the creditor. Now, if she made an error of law, if the appeal moves forward, then the BAP may reverse but the BAP decides the factual findings under a "clearly erroneous" standard and statutory interpretation is reviewed "de novo", looking at the issues raised and evidence presented as if no trial had been held.Originally posted by medievalmagg View Post
Again, the facts are against your friend. As to the law, since I have not done research on the topic I can only assume that the Judge correctly interpreted case law.
Des.Comment
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Hi, Des~
Well, the judge didn't look past the default FT judgment, actually. And, I suppose in all fairness she can't. But it doesn't change the flood of ad hominum attacks that accompanied all the subsequent filings which undoubtedly colored her perception of the matter, and the incredibly weak defenses that his attorney put forth. The other side clearly misrepresented the recorded judgments as liens, and this is what she based her decision to not allow the homestead exemption on because the case law they presented supports that. They erroneously recorded the FT judgment when it was first ordered (which is why it had to be recorded twice and why no lien attached), and spent considerable time researching the possible effects of this in their invoices to their client. But, of course, they simply passed that by in their brief to the judge. I called it a year ago but my friends atty ignored me.
In any case, for a default judgment, it was very harsh. It was as if a hearing had been heard and all the worst possible circumstances had been proven: absolute intent to defraud, a complicit rather than innocent party and so on. Not only was she given an adverse judgment, but she was also basically held responsible for the payment of HIS ORIGINAL judgment as well which is not only excessive but unusual. And, why in her name only? So he couldn't appeal? He was named, so must be able to anyway presumably... the whole captioning was bizarre.
There have always been questions regarding the actual standing of that particular company with respect to its legal rights to litigate in AZ, and somehow this company has become now two creditors to whom my friend apparently owes this money (according to the judge). How is that possible? I know, again by the invoices to their clients (provided to support their proof of claim) that a lot of concern and time was spent regarding the caption/corp name, changing it, and subrogation to a MI company. I suspect a lot of that is hinky, but difficult for us to unwind. He did some research a while ago and the MI corp comm was very intersted in the fact that they were litigating in AZ, apparently without authority, but that's just another thread not followed up on yet. Maybe it's nothing, maybe not.
You're right, appeals usually do fail, and mostly if you're pro se. Aside from whether or not you have a legitimate claim, there is simply pure prejudice against non-lawyers playing in preferential sand box. In this case, he's not pro se by any choice whatsoever. He's lost other cases, true; but it doesn't change the validity of them. He was owed money on one, and was entitled to collect it. The HOA thing he clearly should have won if he hadn't already been slipping with Alzheimer's. All he had to do was concentrate on the facts, the worst being increasing their annual assessments over the maximum percentage allowed among a host of other infractions of their own CC & R's and bylaws. Losing doesn't mean you were wrong, as I'm sure most non-prevailing lawyers would agree.
You've read that judgment... it is obvious to me that they did not wish the status quo returned because they were able to get a much harsher and beneficial result by not doing so.Comment
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