People who receive distributions of money from Ponzi schemes usually are expected to return the money to a trustee who takes over the operation when the Ponzi organizer files bankruptcy. The trustee usually attempts to “claw back” money distributed to the investors, especially money representing winnings or profits. This recent Florida bankruptcy case produced a slightly different result for a Ponzi investor. Continue reading
Within two weeks of filing Chapter 7 bankruptcy these debtors took $12,000 of non-exempt cash from an insurance policy and used the money to fund exempt IRAs. The trustee objected that the infusion of cash into the IRAs on the eve of bankruptcy was a fraudulent conversion of non-exempt assets to exempt assets. Continue reading
One of the defenses to a fraudulent transfer action is that the debtor’s transfer in question was for “reasonably equivalent value.” The general rule is that a transfer to repay a loan is a transfer for value because the transferor receives a deduction in the principal and interest owed on the debt. Continue reading
Bankruptcy debtors use their $4,000 wildcard exemptions most often to protect cars. The debtor can apply the wildcard only to cars in the debtor’s name. For example, if a married couple is considering Chapter 7 bankruptcy and both of the couple’s cars are titled in the husband’s name the wife cannot apply her $4,000 wildcard exemption to either of the cars because she owns no car.
There are so many reasons to stay away from bankruptcy- here is one more. Continue reading
I have written occasionally, and recently, about situations where a parent purchases an asset and puts their child’s name on the asset as a joint owner for estate planning purposes. If the child has a creditor problem, or in contemplation of bankruptcy, transfers, or has the parent transfer, the asset to the parents’ name alone the issue arises of whether the transfer to the parent is a fraudulent conveyance as to the child’s creditors or the trustee in the child’s bankruptcy. Today, a blog reader referred me a bankruptcy case from the Southern District of Florida which dealt with this issue.