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Beware Fraudulent Transfers | Bankruptcy Law Tips

Minnesota Bankruptcy Lawyers at Behm Law Group Ltd.

If you wish to keep your friends and family members in your good graces, don’t attempt to transfer property to them if you anticipate filing for bankruptcy within the next two years and they don’t pay you a reasonable market value for the property. Embarking on such a path may be considered fraudulent and could result in your friends or relatives being sued to give up that undervalued property. They’d be out whatever money they paid you plus the property they thought was theirs.

According to 11 U.S.C. Sec. 548, a bankruptcy trustee can sue individuals who purchased property, such as a vehicle, from the debtor who received substantially less than equivalent return value. Therefore, if a debtor sold a vehicle or similar property worth, say, $15,000, to a friend or family member, but only received $3,000 in compensation, and that transfer took place within two years before the debtor filed bankruptcy, the trustee could sue to reclaim that property in order to sell it for a more accurate market value. The trustee would then take that increased capital and distribute it evenly among the debtor’s affected creditors.

To avoid this potentially embarrassing fraudulent transfer situation, make sure you enter into financial agreements with friends or relatives by asking for a reasonable market value. This is especially important if you’re selling property when you’re under extreme financial duress that could lead to a bankruptcy filing in the near future.

The Bankruptcy Code can be extremely difficult to understand, especially when delving into the more arcane language and clauses that are best left to bankruptcy law professionals. Behm Law Group Ltd. serves Mankato, MN, and surrounding communities, and our bankruptcy expertise is at your disposal to help you successfully emerge from the stressful experience of filing for bankruptcy protection.

To better navigate this somewhat obscure bankruptcy side road, our professional team of bankruptcy attorneys at Behm Law Group Ltd. is available to assist and advise you. Contact Behm Law Group Ltd. today and begin your personal journey out of debt.

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Know Your Preferences: Bankruptcy Assistance in Mankato, MN

Mankato, MN Bankruptcy Attorneys at Behm Law Group, Ltd.

If you made a credit card payment of more than $600, and within 90 days—the preference period—of that payment you filed for bankruptcy, your bankruptcy trustee can request to reclaim that payment.

Don’t get too excited, however, because you won’t be getting that money back. Rather, your bankruptcy trustee will take that reclaimed payment and divide it evenly among the original creditor and all other similarly situated creditors.

Confused? You’re not alone. But Behm Law Group Ltd., can help you understand even the most arcane nuances of bankruptcy law. In the meantime, some background detail:

This section of the Bankruptcy Code (11 U.S.C § 547) deals with the fair and equal treatment of all unsecured creditors, although the original creditor from which the payment was reclaimed may not agree it’s all that fair.

This preferential payments to creditors clause understandably causes some consternation among creditors who must return payments and in turn receive a smaller amount, but it’s intended to ensure all creditors involved receive at least some amount of compensation back from the debtor.

Under the Bankruptcy Code, a debtor is assumed to have been insolvent during the 90 days prior to the debtor filing for bankruptcy. All debtor-to-creditor transfers and payments—over $600—made during that 90 day period are therefore considered suspect.

To learn more about this Bankruptcy Code clause, or for more information about bankruptcy law in general and your bankruptcy options in particular, contact Behm Law Group, Ltd. We have a professional and knowledgeable bankruptcy attorney team who serves Mankato, MN and the surrounding communities. Learn about your bankruptcy options and rights today.