What are limits to bankruptcy fraud? 21 Answers as of July 04, 2013

I transferred my apartment and a car to my children the a few months ago and now I want to file for chapter 7. It might look like fraud but I honestly did it because they were going to college and I wanted to leave them something- not because I knew I would file for bankruptcy. Can i still file or will it look like fraud?

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Mercado & Hartung, PLLC
Mercado & Hartung, PLLC | Christopher J. Mercado
Trustee will raise a presumption of abuse. It's up to you to prove otherwise
Answer Applies to: Washington
Replied: 7/14/2011
Burnham & Associates
Burnham & Associates | Stephanie K. Burnham
Any transfers made to family within one year of filing will be considered a transfer that the Bankruptcy Trustee may seek to get back. If you can wait to file for another 6 months you should.
Answer Applies to: New Hampshire
Replied: 7/7/2011
Breckenridge and Walton
Breckenridge and Walton | Alan D. Walton
It is fraud. The Trustee will seek to recover the assets to distribute to your creditors. You should undo the transfers and try to protect the property with the allowable exemptions.
Answer Applies to: Michigan
Replied: 7/7/2011
Law Office of Lynnmarie A. Johnson
Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
I would advise waiting a year after the transfers were complete, otherwise the trustee is likely to unwind the transaction and sell the items. "Wanting to leave your children something." Is not generally a good enough reason for the bankruptcy trustee not to find fraud.
Answer Applies to: Michigan
Replied: 7/6/2011
The Law Office of Mark J. Markus
The Law Office of Mark J. Markus | Mark Markus
I'm not sure how you transfer an apartment. Do you mean a condominium? In any event, if you transfer something within 2 years prior to filing a bankruptcy case and receive less than "reasonably equivalent value" for it and you were insolvent on the date of the transfer (or became insolvent as a result), it is by definition a fraudulent transfer and a Trustee can sue the recipient to recover the value of the transfer. Additionally states have separate fraudulent transfer statutes that look back more than 2 years which a Trustee can also use to recover the transfer.
Answer Applies to: California
Replied: 7/6/2011
    Ursula G. Barrios Law
    Ursula G. Barrios Law | Guillermo Machado
    The trustee can argue fraud regardless of your intent. You transferred assets to the potential detriment of your creditors. That's what they will look at. You can exempt a large amount of property too, so should consider whether your assets would have first been protected without the transfer. They are not protected after the transfer.
    Answer Applies to: California
    Replied: 7/6/2011
    Bird & VanDyke, Inc.
    Bird & VanDyke, Inc. | David VanDyke
    Unfortunately you cannot file for bankruptcy. All transfers of assets within 2 years of filing must be disclosed. The court will set aside the transfers if you received no consideration.
    Answer Applies to: California
    Replied: 7/5/2011
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    If the apartment and car have value, the Trustee may undo the transfer for the benefit of your creditors. It is fraud if you do not list the transfers in your "statement of financial affairs." You need to consult with an attorney to calculate the value of the assets transferred. A Chapter 13 might be better for you.
    Answer Applies to: California
    Replied: 7/5/2011
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    Transfers to a family member must be reported. The issue is more what happens than fraud. Generally, they will be sued for what you gave them, and you - and they - will lose those items. The tragedy is that had you kept them, you might have kept them in bankruptcy and been able to gift them later. At this point, see a lawyer and determine what the full consequences are.
    Answer Applies to: Georgia
    Replied: 7/5/2011
    Law Office of Maureen O' Malley
    Law Office of Maureen O' Malley | Maureen O'Malley
    How many months? There is a presumption of fraud if property is transferred to family members within 3 years. Did you give them any writing at the time as to the reason for the transfer? How were your finances when you did that? You might be able to convince a trustee and judge what your reasons were. Even in VA there are differences among trustees and judges, so you should see a lawyer for your jurisdiction to be sure.
    Answer Applies to: Virginia
    Replied: 7/5/2011
    Law Office of Jackie Robert Geller
    Law Office of Jackie Robert Geller | Jackie Robert Geller
    YOU ARE REQUIRED TO DISCLOSE ALL TRANSFERS OF PROPERTY MADE TO FAMILY MEMBERS PRIOR TO FILING. IF THE TRUSTEE OR ANY CREDITORS BELIEVE IT WAS DONE TO DEFRAUD, THEN THEY CAN BRING ACTION TO OVERTURN THE TRANSFERS AND PERHAPS CLAIM IT WAS ILLEGAL. A LOT DEPENDS ON THE VALUE OF THE PROPERTY TRANSFERRED. TALK TO A BANKRUPTCY ATTORNEY IMMEDIATELY.
    Answer Applies to: California
    Replied: 7/5/2011
    Colorado Legal Solutions
    Colorado Legal Solutions | Stephen Harkess
    It is not fraud in a criminal sense, but if you file bankruptcy within 2 years, it is very likely that the Trustee could undo the transfers and sell the property to obtain funds to pay to your creditors.
    Answer Applies to: Colorado
    Replied: 7/5/2011
    Evan M. Altman Attorney at Law
    Evan M. Altman Attorney at Law | Evan M. Altman
    By transferring that property, you made a transfer that is voidable and can be brought back into your name by a Trustee assigned to your case. It is called an insider transfer, which you can not do within two years prior to filing Bk.
    Answer Applies to: Georgia
    Replied: 7/5/2011
    Theodore N. Stapleton, PC
    Theodore N. Stapleton, PC | Theodore N. Stapleton
    A fraudulent transfer is any transfer of money or property without equivalent value in exchange. There are defenses that you should consider before filing bankruptcy.
    Answer Applies to: Georgia
    Replied: 7/5/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    Transferring assets prior to bankruptcy creates the problem of voidable transfer. Transfers to a relative, friend or outsider are automatically reversed when they occur within one year of filing. This does not require the transfer to be fraudulent. If a transfer is actually fraudulent the one year period is extended for a period of up to four years. When there are these types of pre-filing transfers chapter 7 is inadvisable. Chapter 13 would be a much better (and safer) alternative.
    Answer Applies to: California
    Replied: 7/5/2011
    Law Office of Harry L Styron
    Law Office of Harry L Styron | Harry L Styron
    The Chapter 7 trustee can avoid transfers to related parties within one year before the filing of the Petition. By avoid, I mean get court orders requiring your children to return the property to the bankruptcy estate. I would be a fraud to conceal the transfers when you respond to the question in the Statement of Affairs in the Petition, which may result in your being denied a discharge of your debts, and also being subject to criminal penalties.
    Answer Applies to: California
    Replied: 7/5/2011
    Law Office of Asaph Abrams
    Law Office of Asaph Abrams | Asaph Abrams
    There is intentional fraud, but there is also constructive fraud or fraud by implication. In short, good intentions don't carry the day.
    Answer Applies to: California
    Replied: 7/4/2013
    Bankruptcy Law Office of Robert Weed
    Bankruptcy Law Office of Robert Weed | Robert Weed
    Unless you have some better explanation than that, I'd stay away form the bankruptcy court.
    Answer Applies to: Virginia
    Replied: 7/4/2013
    Indianapolis Bankruptcy Law Office of Eric C. Lewis
    Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
    Transfers of property for less than fair market value will always raise a red flag and if the bankruptcy Trustee can show fraud or intent to manipulate the system, the Trustee can reverse the transaction and seize any non-exempt assets for liquidation and distribution to creditors.
    Answer Applies to: Indiana
    Replied: 7/5/2011
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