The 341a hearing for this case was held last week on Friday, the day after Thanksgiving. I was sitting in the courtroom minding my business waiting for my client’s case to be called. I noticed that the chapter 7 trustee’s questioning of debtor being interviewed had become more aggressive. This change in tone normally means that the trustee has just seen an asset that is worth something and is not exempt. In other words, the trustee believes that the asset belongs to the bankruptcy estate. Upon further questioning, it came out that debtor transferred $30,000 to his son two months before he filed his chapter 7 case. Question: Why did you give $30,000 to your son? Answer: I gave the money to him to pay for his college tuition and expenses. Question: When did you give the money to him? I gave him the money in August, two months before I filed my chapter 7 case. Question: Did your son pay you or do anything for you in exchange for the $30,000? Answer: No. Question: Sir, the $30,000 that you gave to your son is fraudulent and I want the money back. Answer: But he needs the money for college. Question: Sir, you owe your creditors $170,000 in credit card debt; your creditors also need the money you gave to your son. Question: Give me the name and address of your son; I am going to write him a letter to ask him to give the $30,000 to me. If he fails to do so, I am going to file a lawsuit against him to collect the $30,000.

What is going on here? By these questions to debtor and his answers, trustee has determined that a fraudulent transfer of $30,000 to debtor’s son has taken place, and trustee is invoking the trustee avoidance powers to nullify the transfer. Section 548 of the bankruptcy code states that, “The trustee may avoid any transfer (including any transfer to or for the benefit of an insider under an employment contract) of an interest of the debtor in property, or any obligation (including any obligation to or for the benefit of an insider under an employment contract) incurred by the debtor, that was made or incurred on or within 2 years before the date of the filing of the petition, if the debtor voluntarily or involuntarily: (A) made such transfer or incurred such obligation with actual intent to hinder, delay, or defraud any entity to which the debtor was or became, on, or after the date that such transfer was made or such obligation was incurred, indebted; or (B)(i) received less than a reasonable equivalent value in exchange for such transfer or obligation; and (ii)(I) was insolvent on the date that such transfer was made or such obligation was incurred, or became insolvent as a result of such transfer or obligation.”

《楊清泉律師專欄》TRANSFER OF $30,000 TO SON FOR COLLEGE BEFORE BK FILING FRAUDULENT(PART II)