Can I lose my boat after the seller declared bankruptcy? 16 Answers as of August 01, 2011

I purchased a boat in good faith. I paid cash. I did wait a few months before registering the boat and getting the title in my name. I found out that the seller declared bankruptcy. The bankruptcy attorney is writing and telling me that I have to give back the boat. I have the title in my name. 1. Can they really take the boat? 2. If so, what kind of legal action do they have to take to get it back. 3. Is there any way I can fight this?

Ask a Local Attorney. 100% Anonymous. Free Answers.

Free Case Evaluation by a Local Lawyer: Click here
Heupel Law
Heupel Law | Kevin Heupel
When someone files bankruptcy, the court appoints a trustee who looks to see if there are any assets that can be recovered for the bankruptcy estate. Trustees can rescind transfers of property within the last two years (four in Colorado) if the transfer was not made for fair market value. This means that if the seller sold you a $5,000 boat for only $5, then the Trustee can sue you and recover the boat. However, if you negotiated the price with the seller and the value is close to fair market value, then the Trustee will not do anything.

Given that it’s the seller’s attorney advising you to return the boat, I would not comply with his/her request. Instead, wait until you are contacted by a court-appointed trustee. And yes, you d o have legal rights such as due process, which means you have a right to a hearing and it will be the trustee’s burden to prove that the boat sale was not for fair market value. Basically, it will take a judge’s order to force you to return the boat.
Answer Applies to: Colorado
Replied: 8/10/2011
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
There are not enough facts here to answer this question fully. It sounds like the trustee is trying to get it back on the theory you did not pay fair market value for it. You need to see a lawyer ASAP.
Answer Applies to: California
Replied: 8/1/2011
Eric J. Benzer, Attorney at Law
Eric J. Benzer, Attorney at Law | Eric Benzer
No
Answer Applies to: Maryland
Replied: 7/30/2011
Law Office of Felipe A. Malo, P.A.
Law Office of Felipe A. Malo, P.A. | Felipe Augusto Malo
Do not return the boat to the attorney. Wait for the trustee to get in contact with you. Explain to the trustee what happened. If the trustee still requires you to return the boat then obtain legal representation.
Answer Applies to: Florida
Replied: 7/29/2011
Property and Estate Law, PLC
Property and Estate Law, PLC | Alisa Lachow-Thurston
If you paid a reasonable price for the boat, then you don't have to give the boat back, however if they sold you the boat for much less than the reasonable value you might have to give it back or pay what the amount should have reasonably be.
Answer Applies to: Virginia
Replied: 7/29/2011
    Grasso Law Group
    Grasso Law Group | Charles Grasso, Esq.
    It is unclear from the facts you describe exactly what is going on. Generally speaking though, the bankruptcy trustee has the right to undo or rescind transfers that occurred before the bankruptcy. This usually only happens when it looks like the debtor was trying to manipulate the system by questionably transferring assets prior to filing bankruptcy (typically when the sale/transfer occurs within 6-months prior to filing). The trustee will look to see if the price you paid was reasonable or not, and if they believe there is enough value in the boat to benefit the bankruptcy estate. However, as long as there was no fraud involved, and the transfer is cancelled then you would receive the purchase money from the bankruptcy estate.
    Answer Applies to: California
    Replied: 7/29/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    If you purchase property such as a boat from someone who then files bankruptcy the transaction is subject to being set aside as a voidable preference unless it was an arms length fair market value sale.
    Answer Applies to: California
    Replied: 7/29/2011
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    The delay in registering the boat MAY have cost you your money and the boat. A lawyer needs to look at the case to answer that and you IMMEDIATELY should see a lawyer.
    Answer Applies to: Georgia
    Replied: 7/29/2011
    Law Offices of Carol M. Galloway, P.A.
    Law Offices of Carol M. Galloway, P.A. | Carol Galloway
    In general, if a Debtor transfers, or sells any property within 2 years of filing bankruptcy, the Trustee can file an action against the buyer of such property to reclaim the property. The Trustee's job is to administer the estate of the Debtor, and to protect the rights of the creditors. The rationale is that the Debtor could have paid his creditors by selling "the property," and turning those funds over to his creditors. In your scenario, the Trustee can "avoid the transfer" and "take" the boat. Rather than "turn over" the boat to the Trustee, the "buyer" can negotiate with the Trustee to retain the property, and pay back the equity to the Trustee. The Trustee will then disburse those funds pro rata to the creditors that filed claims in the Debtor's case. If the "seller" does not respond to the Trustee's demands, the seller may be sued by the Trustee. Sellers who are caught in this dilemma will often hire a creditor's attorney who can negotiate with the Trustee, and protect the rights of the "unaware" buyer.
    Answer Applies to: Florida
    Replied: 7/29/2011
    Apple Law Firm PLLC
    Apple Law Firm PLLC | David Goldman
    You should talk with a bankruptcy lawyer to see if your transaction is considered a preferential payment. If you are not related generally this is limited to 90 days prior to the filing of the bankruptcy.
    Answer Applies to: Florida
    Replied: 7/29/2011
    Breckenridge and Walton
    Breckenridge and Walton | Alan D. Walton
    If you did not record the title transfer in accordance with state law, the seller owned the boat until you did. So the title transfer, if it happened within 90 days of the filing, means your ownership can be undone. And you do not get any money back. YOU NEED A LAWYER-NOW
    Answer Applies to: Michigan
    Replied: 7/29/2011
    Burnham & Associates
    Burnham & Associates | Stephanie K. Burnham
    If you paid fair market value for the boat then you should be able to make the case that it was purchased and keep the boat. You should speak with a Bankruptcy Attorney to protect your interests.
    Answer Applies to: New Hampshire
    Replied: 7/29/2011
    Law Office of Maureen O' Malley
    Law Office of Maureen O' Malley | Maureen O'Malley
    I really don't understand. If you bought it in a standard commercial transaction, there should be no problem. I'd tell the lawyer I want to hear that demand from the trustee, along with an explanation.
    Answer Applies to: Virginia
    Replied: 7/29/2011
    Rosenberg & Press
    Rosenberg & Press | Max L. Rosenberg
    It sounds as though you are involved in a possible fraudulent conveyance. This occurs when an item of personal or real property is sold for less than fair market value. If this has occurred, the transaction may be unwound and you may have to return the boat, but would receive your money or consideration back. There are not enough details here to give an adequate response, but this is a start. If you think you got a deal that is too good to be true, it just might be. Thanks for tuning in!
    Answer Applies to: Connecticut
    Replied: 7/29/2011
    Ursula G. Barrios Law
    Ursula G. Barrios Law | Guillermo Machado
    If you paid cash on a valid contract and have title, as long as not a fraudulent transfer, you should be able to argue that its legally yours without consequence. Unless boat was asset in debtor's BK case that court wants to pay creditors.
    Answer Applies to: California
    Replied: 7/29/2011
Click to View More Answers:
12 3 Free Legal QuestionsConnect with a local attorney