When we hear the word fraud, our minds turn to white-collar criminals, Ponzi schemes, and scam callers. However, one of the most common roadblocks in filing bankruptcy is a type of fraud people usually don’t expect: “a fraudulent transfer.” Today, we’ll look at “fraudulent transfers” and break down what they could mean for you.
What exactly is a fraudulent transfer?
A fraudulent transfer happens when a debtor transfers property intending to hinder, delay, or defraud creditors or makes a transfer for below the fair market value within a certain time frame (usually two years) before filing bankruptcy.
The first part seems obvious: if you transfer property, try to hide it from creditors, and then file bankruptcy, yes, that’s fraud. But what about the second part?
How many of us have sold something to a friend or family member at a discount or even gifted it for free? What about an ex finally removing your name from a vehicle? How about refinancing your home and taking your name off the title?
All these situations could create potential issues if you’re considering filing for bankruptcy.
In bankruptcy proceedings, fraudulent transfers are typically challenged by creditors or the bankruptcy trustee. If a court finds that a transfer was fraudulent, the transfer may be reversed or set aside, allowing the property or assets to be used to satisfy the debtor's obligations to creditors.
What can I do?
The good news is that a fraudulent transfer doesn’t necessarily mean bankruptcy is out of the question. There are plenty of solutions to address fraudulent transfers in bankruptcy, and we’re here to help you find the right one.
Call Now For A Free Strategy Session With A MN Bankruptcy Lawyer
If you’re concerned about recent transfers and would like to discuss how this could impact a bankruptcy, contact Minnesota’s most kind and helpful bankruptcy law firm by going to www.lifebacklaw.com now.
