18 Jul The seemingly innocent fraudulent transfer
Bankruptcy trustees can sue to recover money or assets that the debtor transferred before filing. It’s easy to spot the gift; the garnishment; or the voluntary payment to a creditor when considering bankruptcy.
The transfers that clients don’t think of as a transfer that needs to be disclosed are the deeds that take someone off title to a home to facilitate a refinance, or remove someone from title who was just there to obtain a better loan.
I see this all the time: wife has better credit, so husband deeds his share of the house to her so she can get the loan in her name. Or, both have poor credit, so a parent or child is added to title to get the loan based on their stronger credit record.
Whether it is the transfer that adds someone to title, or the one that removes an owner, or apparent owner from title, these transactions can be construed as fraudulent transfers: an interest in real property changed hands without the exchange of money.
Make sure that you tell your bankruptcy lawyer about any changes to the way in which you hold title to your assets so your lawyer can assess the issues and prevent a situation where you lose your discharge or someone who tried to help you gets sued by the trustee.
Cathy Moran, Esq.
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