If you’ve filed for bankruptcy, there is virtually no need to hide assets. With a few exceptions, most property is protected from creditors under state and federal law. As such, there is absolutely no reason to be anything other than entirely transparent during the bankruptcy process. That said, it’s still a good idea to have a full understanding of what are otherwise considered “fraudulent transfers,” or in layman’s terms, intentionally transferring an asset in such a way that conceals the asset’s value. As with many laws, intent or ignorance of the law doesn’t protect a violator, but by better understanding fraudulent transfers, you can ensure it doesn’t happen to you.
Understanding The Two Kinds of Fraudulent Transfers
To keep things simple, keep in mind that there are two kinds of fraudulent transfers. The first kind is considered “actual fraud.” This type of transfer is dependent on the fact that the violator willfully and intentionally committed the fraud. For example, you knowingly gave away or sold an item at a significantly reduced value to someone with the sole purpose of hiding it from a creditor. If it can’t be proven that you intentionally transferred an item in such a way, then it isn’t considered “actual fraud.” The specifics of “actual fraud” transfers are outlined in U.S. Bankruptcy Code.
The second kind of bankruptcy fraud is called “constructive fraud.” Constructive fraud differs from actual fraud in that there doesn’t necessarily have to be intent on the part of the debtor to give the gift or sell the asset with the purpose of defrauding a creditor. Just as with “actual fraud” transfers, the specific parameters that outline “constructive fraud” are outlined in U.S. Bankruptcy Code under sub-section B.
How To Avoid Accusations of Fraudulent Transfers
As a debtor, don’t worry too much about getting accused of committing a fraudulent transfer. There are a few common considerations that make it very unlikely that such an accusation would happen, but either way, keep the following in mind:
- Don’t Give Away Major Assets- Most debtors in times of insolvency don’t give away their assets. Instead, they typically hold on to them. If you’re not jettisoning all of your major assets, don’t expect creditors to bat an eyelash.
- If You’re Charitable, You’re Usually Exempt- For the most part, the U.S. Bankruptcy Code makes very generous exceptions for most charitable giving, ensuring most gift-giving to charities is well above-board.
- Don’t Sweat the Small Stuff- If you’re giving away small gifts, these are rarely an issue. There is no clearly delineated number in the Bankruptcy Code, but if it’s under a few hundred dollars, then it’s most likely fine as far as gift giving is concerned.
Keeping these tips in mind is a sure way to avoid charges of a fraudulent transfer.
Get Peace of Mind With An Experienced Bankruptcy Lawyer
If you’re concerned about whether or not a transfer might be fraudulent or not, that’s where consulting an experienced bankruptcy can make a world of difference. If you want the peace of mind that comes with an outstanding bankruptcy lawyer in Louisiana, look no further than the law offices E. Orum Young. With over 20,000 successful cases filed and and 35 years of experience, contact E. Orum Young today for your free consultation.