What is a Fraudulent Transfer in Minneapolis, Minnesota
Even if you are not intending to be fraudulent when you transfer property prior to filing for bankruptcy, some transaction will be labeled so.
Fraudulent transfers happen when another party receives property for less than fair market value in the 2 years prior to filing.
For example, say you have a car worth $5,000 but you sell it to your sister for $500 in the two years prior to filing, because she really needed a car and why wouldn’t you cut your sister a deal? Well, this scenario is the perfect example of a fraudulent transfer because the sister received something worth $5,000 for only $500. The trustee in your case will want the difference in value and amount received paid into the bankruptcy estate.
As another example, say in the 5 years prior to filing your case, you added your non-filing spouse’s name to the deed of your home, giving them a half interest. Depending on whether your trustee will pursue it or not, it could be a fraudulent transfer under Minnesota’s Uniform Fraudulent Transfers Act. The look-back period is 6 years under this act for fraudulent transfers. The trustee will have to prove you intended to hinder or delay or defraud your creditors at the time of the transfer.
Although you may think you are innocently transferring, selling, or gifting property, it may be considered a fraudulent transfer in bankruptcy. Always speak to a bankruptcy attorney first, before selling or getting rid of property pre-filing.
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