Bankruptcy "Fraudulent" Transfer of Assets in Georgia

A fraudulent transfer of assets prior to bankruptcy may result in a denial of your Chapter 7 bankruptcy relief.
 
 
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May 14, 2010 - PRLog -- A fraudulent transfer of assets prior to bankruptcy may result in a denial of your Chapter 7 bankruptcy relief. Section 727 of the Bankruptcy Code says that your transfer of assets within the year prior to your filing for bankruptcy, with the intent to defraud, hinder or delay creditors, can be grounds to deny your Chapter 7 discharge. Fraudulent transfer issues usually arise when an individual transfers title in real or personal property to a spouse or other relative to protect that property from the reach of a pursuing creditor.

In the following real life cases, the fraudulent transfer rules that apply in Georgia bankruptcy cases yield very harsh results:

In the Davis case, the debtor transferred a house to his wife, then, after meeting with a lawyer, had his wife transfer it back to him. He then filed Chapter 7 within a year of getting the title back in his name. The 11th Circuit Court of Appeals said “no” and denied his discharge. Even though he had tried to fix the problem, he still acted with wrongful intent within a year of filing.

In the Future Time case, a debtor quit claimed his interest in a house to his wife. The house was fully mortgaged and no equity was transferred. The Bankruptcy Court said “no” – it does not matter that no value was transferred; the wrongful intent was there.

In Georgia, any transfer of property in the year prior to filing – especially that of a house or a car – is likely to create problems. Even transfers to strangers for full value can be a problem.

What can you learn from this?

if someone has a claim for money damages against you, do not try to protect your assets by giving them away or selling them for pennies on the dollar – this will not work to protect those assets
-before trying to dispose of any property when facing a claim for money damages, talk to a lawyer first

-if you have already transferred property come totally clean with your bankruptcy lawyer – not telling him will only make matters worse

Ironically, Georgia bankruptcy courts are more forgiving and willing to give a debtor the benefit of the doubt when it comes to a debtor’s failure to disclose assets, which can also be a basis for the denial of discharge under Section 727. In transfer cases, just about any transfer for any reason will likely be deemed “fraudulent” and will prohibit you from getting bankruptcy relief.

For more information visit http://www.bankrupcy-alternative.com/bankruptcy-chapter-7... or call us directly.

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