Transfer 2 Months Before Ch7
Posted: Thu Oct 28, 2004 2:16 pm
Adeeb clearly says that undoing the transfer undoes the 727
action. It also says, I believe, that fessing up at the 341
meeting, cures the taint of "fogetting" something on your
schedules. Bernard says that taking the money out of your bank and
putting it in your safe at home is a "transfer." Another case said
getting a cashiers check and carrying it around in your purse to
keep creditors from grabbing the money is a transfer for 727
purposes. Bernard makes no sense to me except that the debtor
initially lied about the funds saying that he lost them gambling
(ever had a client tell you that?). He finally fessed up (at trial
apparently) that he put the money in his safe at home.
Check out the Texas case of In re Davis, 911 F. 2d 560 (11th
Cir. 1990), the debtor, two days after a loan became due,
transferred his 50% interest in his home to his wife. His former
partner sued him in state court, obtained a judgment and filed a new
suit to unwind the transfer to his wife. On the advice of a
bankruptcy attorney, the debtor's wife reconveyed the interest to
the debtor who immediately filed a chapter 7 petition disclosing the
transfers. The bankruptcy court found that the transfer of property
of the debtor to his wife was made with the intent to hinder, delay
or defraud a creditor, notwithstanding the retransfer of the
property the day before the petition was filed, and denied the
discharge. The debtor contended that discharge should not be denied
because the transfer in question did not in fact diminish the assets
available to creditors. He explained that there was no equity in
the home beyond the homestead exemption. The court rejected that
analysis, observing:
"When appellant transferred his interest in the residence to
his wife, he obviously intended to shield what he thought was
valuable property from the claims of his creditors. To hold now
that there occurred no transfer of property with the intent to
hinder creditors merely because the debts on the residence exceeded
its estimated fair market value would be to reward appellant for his
wrongdoing, which the court refuses to do."
The 11th Circuit also specifically rejected the Adeeb
analysis that the word "transferred" means "stayed transferred."
Once the transfer was made and the requiste intent existed, the
discharge must be denied, notwithstanding what the debtor did later.
The post was migrated from Yahoo.