Gifting assets to avoid potential lawsuits

It is considered a fradulent transfer. However, it is up to the creditor to prove it in court! Unless you taunt your creditor by telling them that you gave away all your assets to avoid garnishment or you admit it in court, they will never know it was fradulent.

What I would be worried about more is the gift taxes which you MUST pay on each gift. Even if you claim that these are tax exempt gifts to your children (up to $13K tax free) or spouse (up to $26K), you still would need to convince the IRS that there are real gifts and not an attempt to avoid legal problems. The IRS does not look kindly on fradulent transfers and you colud be looking at serious penalties.

The collector isn't going to know you gave gifts of money. Besides, that, would the total amount of gifted money have paid all of your debts? The IRS might notice taxes need to be paid on the gift amount, over the non taxable amount allowed.

Well if the transaction does not involve money how is the IRS going to get involved?

So I give someone a $5000 car for their birthday, they transfer the title, there is a $5 gift tax. Thats it. Thats the IRS's cut of the deal isn't it?

And I've done it before, thats how it works.

I guess what I'm asking is since I'm in debt does it make a difference?

In the second link I provided you will find this:
Just the possibility of a creditor???s allegations of fraudulent conveyance should not deter aggressive asset protection planning prior to time a judgment is entered by a court. People have a constitutional right to control or transfer their property until such time as a judgment creditor obtains a legal interest in the property. This is why the applicable statutes do not prohibit or make illegal fraudulent conveyances. Because a court cannot increase the amount of the judgment damages already awarded against a debtor because of a debtor???s fraudulent conveyance, there is little or nothing to lose by planning to protect your property even if some planning might be subsequently challenged or even reversed.

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This is my main concern, whether or not this is good advice or plain BS I don't know: [quote]People have a constitutional right to control or transfer their property until such time as a judgment creditor obtains a legal interest in the property.[/quote]

If this is true, at this point no one has expressed interest in this property. This property has nothing to do with the debt, this property was paid for in cash, there is no judgement on it or interest in it.
So if the above quote is true I can do whatever I want with the property right?

Or is there a catch?

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Once a collector gets a judgement against you, its VERY easy for them to find out if you made any major transfers of assets (real estate, auto, securities, etc) particularly if you claim that you own nothing. All they need is a garnishment/lien order and a private investigator.

Please explain to me how these would be fraudulent. :!:

I have no judgements, garnishments, liens AT ALL as of right now. If I get one tomorrow, the property would already have been transfered so they can't say I was hiding it from anything that happened AFTER the transfer of ownership.

And would they hire a PI to go after a car that has a book value of $5000?
I know a few people that have cars worth $20000 that are wrecked and stripped (legally) A debt collector might get all money happy going after these guys assets only to find the "book value" is actually scrap. Then what, they pay the PI out of pocket?

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While living in Fla. My husband had several strokes and transferred the deed to our home and title to our car to my name in 2003. This was to prevent our son from trying to take our property in probate. The following year (2004) a judgement was granted against my husband because he had cosigned on a loan for my son. We later moved to another state. Since there was no judgement pending at the time of the transfer, How can it be considered "fraudulent"? We only wanted to protect our assets from our son.

Guest, your transfer was not done to avoid a debt, it was done as estate planning, due to health concerns. Also there is generally a time frame that applies, in California I have heard it is about 6 months prior to the filing of the claim.

Thanks for your response.

It's called "Fraudulent Conveyance" and is fraudulent because you are doing it solely to avoid creditors. Depending on your state, it could be a violation of the Uniform Fraudulent Transfer Act (UFTA) or the older Uniform Fraudulent Conveyance Act (UFCA).

"http://legal-dictionary.thefreedictionary.com/Fraudulent+Conveyance"

Of course they would have to prove that in court, but for anyone to even advise you to do such a thing would be highly unethical. If you are going to defraud someone, you had best be silent about it....

If it's your debt, pay it - offer a settlement, payment plan, etc. If it isn't, fight it. Other than that, you can cross your fingers and wait for 7 years with baited breath....

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the co accounts will stay on your credit report for 7 yrs +180 days from the date of first delinquncy that brought the account to its present standing..per FCRA..after the 7+yr time they will fall off...and yes you're right paying 25% of the debt would be a 100% waste of money UNLESS you could have settled for 25%..

Also wanted to add that the SOL for suing depends on the state. While it may stay on your credit report for 7years and 180 days, the SOL will depend on the last date payment was made, and what state the debiter is in.

very true beli..thanks for adding info to my incomplete answer

Thanks for the info on SOL.
My experian credit report lists when each account will be off the report. So to find out when I can no longer be sued I need to look at last payment date, and the SOL of the state of the creditor?


Also I am in the process of selling an asset, I should have payment for it this week.
I also just put in a $x,xxx.xx settlement offer for a lawsuit from a credit card debt.
I need to file ch 7 because I have 9 more accounts, not enough assets to sell to even settle for 25% each.

A BK lawyer told me to sell my assets (for fair market value)and spend the money on necessities and get rid of it (the money) in a reasonable amount of time, then file ch 7.

Will this money I pay toward settling this one lawsuit be considered spending on necessities? I read somewhere that it won't. That it will have a negative impact on filing ch 7.

Any info on this?
Or maybe I need to head to the BK forums at this point.

A creditor can claim fradulent conveyance to stop you from filing Chapter 7. If the judge finds out about the fradulent gift, the court may order the car to be included in the bk or even dimiss your petition all together.

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Well at this point I'm saying good bye to internet forums.
So much gets lost in translation or whatever you want to call it. There is a lot to credit problems and debt, etc.
Such as the above saying file ch 13--can't do it without income.

People in general are just missing the point and filling in the blanks as they go and just like everything I posted on this site it veers so far away from the subject that it doesn't even make sense.
If you can't make sense of what I type, don't just assume and reply with something off topic.
But you know what, it doesn't matter this site is useless.

are you thinking about ch7? well i did file ch7 and no one came to take any personal property what so ever. yes i had to list it in my case, but not one creditor even showed up at the bk court on the big day..as for gifting to protect from bk-i really do not know..i do know you can keep so much in assets (i think 10,000-check w/attorney) i listed my ski boat(paid off), my truck (paid off), and other paid off assetts an no one came to attack..no one attacked any personal property or contested bk in anyway..as for this site being useless, i'm sorry you feel that way-its really helped me alot! i'm totally debt free the second time b/c of this site...

You filed ch7 and had no problem probably because of your state exemptions. I lived in one state that allows you to keep one vehicle and a ton of other stuff no matter what it's worth (without going into great detail)
The state I'm in is the state I would legally have to file in, and they basically can take anything you own worth $1000 or more.


I'm a little PO'd about the whole "you cannot sell anything" comments.
So I can't have a yardsale because I have debts owed? Thats selling off assets. My question was selling $15,000 worth of assets, I said two assets worth $15,000 when added together. Thats the tip-off. Maybe I should have said I made $15,000 off a yardsale and CL items. Would saying $15,000 worth of trinkets have made a difference in the replies I got? I bet it would have.

I could easily have a yardsale and sell $15,000 worth of furniture , etc (not saying I have any funiture) I could post adds on CL and sell off anything. Yea, theres no legal paper work that goes with furniture. So I could sell it and go on a crack binge instead of putting it toward debt, and no one would ever know.

Stupid me for asking the general public. I'm dealing with lawyers/attorneys from now on for legal advice, not a message board.

This seems like step .5 in a legal battle, google your debt problem and find this site, next step is picking up the phone book. Step one is talking to a legal professional.

You're not likely to get far with anything from this site, maybe if you're battling that $50 cell phone bill.

i would agree with you that directly consulting attorneys from now on would be your best guess on your topic..but as for the amounts of personal excemptions it very well could very from state to state..i wish you the best of luck in your situation and hope you find the guidence you need..but i agree i would not construe anyhting from these forums as legal advice..but i was able to negotiate down over 100,000 in debt utilizing the advice i got here! best regards!!

Again, you need to decide what to do in this case. As I said, we cannot advise you to do something that could possibly get the court's attention and cause you problems. Then again, it may be no worry at all. Do what you feel you need to, you will anyway I'm sure, but no one can advise you to divest yourself of your assets in order to avoid paying debt. You are going to do what you want in this case regardless, so why is it so important that someone verify what you are going to do anyway?

It's all up to you, the ball is in your court.

Your original question was: Quote:

Yes this post got confusing. I have a lot going on. At first it (my situation, not necessarily this thread) started with a lawsuit, that opened my eyes to potential future problems. (The lawsuit seems to have gone ok).
Then I realized I can get another lawsuit thrown at me at any given moment.
I came to the decision that ch7 might be my best answer. I cannot afford to pay each debt off via lawsuit.

The only problem I see is that I already gave my father my car in exchange for any money I needed for the lawsuit, plus he mentioned the fact that it will include any money I need to try to eliminate all debts by filing ch7.

But as I understand it my first move was my first mistake. I signed the title as "gift" so I'm assuming there is no way out of that. I'll find out.
I also sold, unexpectedly, another car today, legitimate sale. (the guy kept backing out with excuses for a month or so, but came through with cash just today) So I'm down to an old gas hog of a truck thats worth next to nothing.

The BK lawyer I spoke with is one of the best around here. I may have explained what he said too quick trying to make the post short.

He said to legally file ch7 I can risk losing my vehicles or I can sell them for fair market value and use the money from that to pay legitimate bills and expenses in a reasonable amount of time. He said specifically that this does not include paying off relatives, etc. It has to be real and documented such as paying out of my bank account, paying stuff like rent, utilities, groceries. (basically no luxury items or anything like that)

So my next step is to talk to another few BK lawyers, tell them my situation, etc.

Excellent, thank you for the clarifications.

Here is a more clear answer to your original question: "http://www.moranlaw.net/nogiveaway.htm"
And more specific: "http://www.bankruptcylawnetwork.com/2007/07/18/the-seemingly-innocent-fraudulent-transfer/"

This should help you to figure out which assets are no problem and which may be of some concern: "http://www.moranlaw.net/assets.htm"

I hope this helps. I apologize if I came across as brusque above - we get debt collectors posing as Guests who come in here and try to stir up trouble and it makes it harder to help people defend themselves against unfair and illegal practices.

And as far as vehicles, it depends on the state you live in and how much equity you have in it. See "http://www.moranlaw.net/retaincar.htm"

While the Law Firm I have mentioned here is in California (and hence the details may be different for your State) I believe this to be a very helpful website and I hope you also can find it of some assistance.

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