What to Do If You Have Been Sued on a Fraudulent Transfer

Fraudulent Transfer

Under the federal bankruptcy laws, there are very tight restrictions on the transfer of property, both before and after you file. If the bankruptcy court determines that you improperly conveyed property to keep it out of your bankruptcy estate, you could face legal action alleging fraudulent transfer, a form of bankruptcy fraud. What should you do if you are sued for fraudulent transfer?

First and foremost, don’t ignore or minimize the seriousness of an allegation of wrongful transfer. Start by gathering all the documentation you have related to the item or transfer in question. Find anything that confirms when the item as transferred, why the transfer was made, and what the perceived value of the item was at the time of transfer.

It’s not uncommon for people to make transfers without knowing what they are doing. The key, with respect to fraudulent transfers, is that they require intent. If you can demonstrate to the court that you had no knowledge that your transfer was wrongful, or you had no intent to hide assets or wrongfully keep assets out of the hands of creditors, the transfer may not be considered fraudulent. The court may still have the power to recover the asset, but you won’t be personally liable.

Another situation where you may avoid liability is where there’s no perceived value in the property. For example, if you have a home that has no equity, a court may rule that there’s no fraudulent transfer as there was nothing of value for a creditor.

Contact Neuner & Ventura, LLP

We understand the stress, anxiety and confusion that can be associated with a potential bankruptcy filing. We offer a free initial consultation to every client. For an appointment, call Neuner & Ventura at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.

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