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Fraudulent Conveyance

Interviewer: A term I heard was fraudulent conveyance. What is that? How does it happen? How does that harm your bankruptcy?

Adam: It is when a home is conveyed in order to protect it from being attached by creditors. During the bankruptcy process, the debtor conveys the home or transfers it to a family member.

Interviewer: Is that like a quitclaim deed to their uncle?

Adam: Yes, somebody that they trust will give it back to them after the bankruptcy is complete.

Filing for Bankruptcy Does Not Allow Freedom to Amass Credit Card Debt

Interviewer: Have you seen cases where people run up their credit cards right before they file?

Adam: I haven’t seen anybody try that, but that would be something that a bankruptcy trustee would be able to catch and they would attempt to call back whatever that was.

Interviewer: They would attempt to undo it?

Adam: Yes, or at least get back whatever they could.

Your Finances Will Be Examined during the Bankruptcy Process

Interviewer: If someone is going to file bankruptcy, the trustee is going to look back at their finances before they filed. They will examine pay stubs or bank accounts or tax returns. So, should people avoid making any big transactions or big moves before their bankruptcy? How long should they not do anything that could be considered fraud before they file?

Adam: A part of it will depend on the asset itself, but let’s look at an annuity, for example. I think the time frame they can go back on that is three years. If a father gave a daughter his annuity yesterday and filed today, they will obviously try and get the money back from the daughter.

Interviewer: What if it was six months ago? It is potentially possible, but just less likely?

Adam: It is potentially possible. There is also the chance that there will be a penalty levied on the debtor who is filing if they fail to disclose. You know, you are looking at a $5,000 fine and up to five years in jail.

Interviewer: If you, you try to defraud the bankruptcy court and lie to them there are severe penalties?

Adam: Yes, that is right.

By Adam Hunt

Ohio Criminal Defense Attorney Adam Hunt
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