CC Brown Law – Alternatives to Transfer Property Before Filing Bankruptcy

CC Brown Law Alternatives to Transfer Property Before Filing Bankruptcy

For debtors who wish to transfer property before filing bankruptcy, discussing with an bankruptcy attorney in their state is only way of guaranteeing whether the transfer of property would establish any fraudulent conveyance. Though there are so much alternatives to transfer property and assets before bankruptcy to prevent creditor claims on the assets, the ability to do so is only determined in a case-specific basis, and in turn, the state laws applicable to fraudulent conveyances and statutes of limitations will vary. Under the Bankruptcy Code, as well as the UFTA (Uniform Fraudulent Transfers Act) and the UFCA (the Uniform Fraudulent Conveyances Act), debtors are susceptible to fraudulent conveyance claims from creditors for a varied period of years before actually filing bankruptcy.

Relying on the specific transfer of property and the individual factors surrounding a given debtor's financial situation, the courts must use a case-by-case method to find out whether a given property transfer establishes any fraudulent conveyance. This is often done at the court's discretion, most often with requests from creditors to look into transfer of property by a debtor owing the credit for a given secured or unsecured amount. Should a creditor believe a given asset transfer by a debtor be an attempt to place the asset out of reach of creditors and bankruptcy trustees once bankruptcy has been filed, they can request a preliminary injunction against the transfer and request the courts investigate the transfer.

But what establishes fraudulent conveyance, whether actual or constructive? Again, this is found out on a case-specific basis, but the following elements factor into proving fraudulent conveyance,

Every state embracing various laws and policies regarding fraudulent conveyance of assets before filing bankruptcy. The timeframes allowed and disallowed by each state will differ, depending on the nature of the transfer of the assets and other factors.

A debtor can't conveyance assets within one year of filing bankruptcy without the conveyance being construed as constructive fraud in most cases. Typically, these timeframes are longer in certain cases.

A debtor's attitude before transferring the assets will be inquired by a bankruptcy trustee. Although, as in the case of constructive fraud, it is impossible to decipher the exact intention of a debtor at the time of the asset transfer, the courts typically adhere to set standards when reviewing certain elements and actions that will be indicative of intent to defraud creditors, which will include timing of the transfer, whether transfer was done in light of threatened or actual litigation, whether the transfer was done at less than an actual equitable value, whether the transfer involved a third party with a special relationship to the debtor, and whether the transfer involved placing assets under the perceived protection of a business entity or corporation

Loss extenuation before filing bankruptcy is a reasonable reaction from debtors, but any action taken before bankruptcy will be subject to the scrutiny of the courts and one's creditors in most cases. Only an attorney can truly ascertain what alternatives a debtor may have regarding their assets and precluding them from entering the overall bankruptcy estate. The shorter before a bankruptcy filing any attempt to transfer assets occurs, the less likely these transfers will be allowed by a bankruptcy trustee. Consult with an attorney before making any asset transfer if bankruptcy filing seems likely in one's future.

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