I am a bankruptcy attorney in Michigan. You filed for bankruptcy prior
to enactment of the new 2005 Bankruptcy Code. Therefore, the old laws
apply. You transferred property to your son more than 7.5 years before
filing for bankruptcy. It is important to remember that the bankruptcy
trustee can proceed under federal or state law.
Federal Law:
A "Fraudulent Transfer" is the exchange of property prior to the
filing of a bankruptcy petition for inadequate value, in an effort to
shield the asset from the bankruptcy. Pursuant to the "Uniform
Fraudulent Transfer Act", a Court may bring certain property back into
the estate, if it was improperly transfered. However, if property was
sold for its reasonable market value, a Court cannot recover the
property.
A Fraudulent Transfer is the transfer (conveyance) of title to real
property for the express purpose of putting it beyond the reach of a
known creditor. In such a case the creditor may bring a lawsuit to
void the transfer. However, if the transfer was made without knowledge
of the claim (or before a debt has matured), for other legitimate
reasons, and/or in the normal course of business, then the creditor's
attempt to obtain a judgment setting aside the conveyance will
probably fail.
The Bankruptcy Code limits the trustee to avoidance of fraudulent
conveyances to those made within a year before bankruptcy.
THEREFORE, UNDER FEDERAL LAW, THE TRUSTEE CANNOT TAKE ANY ACTION TO
AVOID THE TRANSFER SINCE THE TRANSFER TO YOUR SON OCCURRED MORE THAN
ONE YEAR PRIOR TO FILING FOR BANKRUPTCY.
Massachusetts Law:
Many states have adopted the Uniform Fraudulent Conveyance Act (the
?UFCA?). Massachusetts adopted the more modern version called the
Uniform Fraudulent Transfer Act (the ?UFTA?). M.G.L. c. 109A. For a helpful
comparison of the statutes, see Michael L. Cook and Richard E. Mendoles, The
9 Uniform Fraudulent Transfer Act: An Introductory Critique, 62 Am.
Bankr. L. J. 87 (1988). The Massachusetts UFCA had a six year statute
of limitations. The
Massachusetts UFTA has a four year statute of limitations. The UFTA applies to
transfers made on or after October 6, 1996. The two statutes contain
similar concepts with some difference in terminology. Under both, a
transfer made ?with the actual intent to hinder, delay or defraud a
creditor? may be avoided regardless of the financial condition of the
transferor.
THEREFORE, UNDER MASSACHUSETTS STATE LAW, THE TRUSTEE CANNOT AVOID ANY
TRANSFERS MADE MORE THAN SIX (6) YEARS FROM THE DATE OF FILING
BANKRUPTCY. SINCE YOU MADE THE TRANSFER TO YOUR SON 7.5 YEARS PRIOR TO
FILING FOR BANKRUPTCY, THE TRUSTEE CANNOT TAKE ANY ACTION TO AVOID THE
TRANSFER.
CONCLUSION: IT IS IRRELEVANT THAT YOU TRANSFERRED THE PROPERTY TO YOUR
SON FOR ONE DOLLAR. UNDER FEDERAL AND STATE BANKRUPTCY LAW, YOUR
PROPERTY IS SAFE AND YOUR SON CANNOT BE SUED BY THE TRUSTEE FOR A
FRAUDULENT CONVEYANCE. THE TRANSFER WAS MADE OUTSIDE THE APPLICABLE
PERIOD FOR THE STATUTE OF LIMITATIONS. THE TRANSFER TO YOUR SON IS NOT
A FRAUDULENT CONVEYANCE. |
