Examples of Fraudulent Transfers in Bankruptcy
A fraudulent transfer is a transfer before a bankruptcy filing with some type of fraud that the bankruptcy trustee can claw back. Common examples are when something is sold or transferred with the intent to hinder, delay, or defraud your creditors or you transfer something under fair market value before filing. But there are other types of fraudulent transfers as well. Your attorney will go through your case with you and should let you know if there is any risk with filing and fraudulent transfers. Your attorney should be able to discuss if there are any possible defenses, as well. Under federal law the look back period for fraudulent transfers is two years.
An Example:
Let’s say you sold a car for $1,000 within the year prior to filing bankruptcy. The car was really worth $3,000 but you cut the person buying it a good deal. The trustee in your case may try to pursue this as a fraudulent transfer, this is because you got rid of property in the two years prior to filing for less than fair market value. The trustee will want the amount you didn’t receive, so in the above example, $2,000, which they will distribute to all of your creditors.
Typically in a fraudulent transfer situation the trustee will either want the value you should have received or will avoid the transfer and sell the property. The funds received from a fraudulent transfer will be distributed to your creditors.
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For any questions you have regarding transfers prior to bankruptcy or anything else bankruptcy related, visit www.lifebacklaw.com to speak with an attorney today. You will be glad you did!
