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There are cases where people have transferred a property recently and filed for bankruptcy. Very often they are uncertain of the consequences related to the transfer. This uncertainty of the laws of transfer and the issues that are associated with bankruptcy in such cases might give rise to various questions. This article provides answers to some of the most commonly asked questions about such issues. A deed was gifted on my home to my son for the purpose of estate planning. Is this transfer exempt under bankruptcy code 548 if I file for a chapter 7?
It is possible that the transfer may be exempt under Bankruptcy Code’s Fraudulent Transfers and Obligations Section 548. However, according to your state’s Fraudulent Transfer Act it may not be exempt. Your state may have a look bank period of more than 2 years. The trustee and / or creditors may use this to cancel the quit claim deed to your son. In Ohio how much time should pass between transfer of personal assets and filing for bankruptcy?
There is an issue of fraudulent transfer. Bankruptcy trustees have the power to nullify certain transfers of an individual’s assets. Contentious assets are those which are unfairly placed that can’t be reached by creditors. Property or asset which is transferred with an ulterior motive of preventing creditors from accessing them is known as fraudulent conveyance or fraudulent transfer of property / assets. Bankruptcy law has two types of fraudulent transfers. The first one is actual fraud. This is what is intended to defraud creditors. Another one is constructive fraud. This kind of transfer is made in exchange for out of the realm of consideration. In your case, it could be considered an actual fraud when a transfer of property is made within one year before the filing of bankruptcy petition. In case it is considered fraudulent the trustee has the right to recover the property or the value thereof. Creditors suspecting fraudulent transfer of property might obtain a temporary restraining order and stop the transfer before it happens. I transferred some of my cash to my wife through a brokerage account. Am I allowed to declare bankruptcy without involving my wife and that money?
You may want to file for bankruptcy protection separately. Usually, your wife will not be directly affected. While her separate assets will be safe, the transfer of assets may not be so depending on the circumstances in which the money was given to her. If the bankruptcy trustee considers it as a fraudulent transfer of assets then the transfer could be reversed. I quit claim deeded land to my wife 10 months before filing for bankruptcy. My attorney has been informed of this. How will my bankruptcy and transfer of property viewed?
In all likelihood, it will be considered a fraudulent transfer by the bankruptcy trustee and the transfer will be reversed back to you from your wife. You can still continue with your bankruptcy. In case the deed is not recorded then you might ask your wife just to tear it up. Then the bankruptcy could be amended to include the property. I put my entire property and house in my wife’s irrevocable trust 14 months ago. Six months later I filed for bankruptcy. What will be the status of transfer of property?
As per rules of bankruptcy, any transfer of property that has taken place less than two years must be reported. Hence, if your waiting period is more than two years from the time of transfer of your property then you may not have to list the transfer on the Bankruptcy Statement of Financial Affairs. However, the avoidance power of the trustee differs from state to state. It goes back to the amount of time that the law of that particular state allows. For example, in Utah creditors can go back more than two years to cancel transfer of assets. It is important to be properly informed and be aware of the laws regarding transfer of property. Critical issues might arise sometimes that might be beyond the understanding of the lay person. In such circumstances it is better to ask a bankruptcy lawyer about the correct course of action.
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