If you were a debtor in financial difficulty who thought that your creditors were likely to seek

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If you were a debtor in financial difficulty who thought that your creditors were likely to seek a bankruptcy order against you in the next few months, could you protect some of your assets against your creditors by transferring them to your spouse for $1?

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It is unlikely that you could transfer assets to your spouse for 1 Under the BIA certain transactions can be challenged by the trustee If a bankruptcy occurs any transfer of assets to a spouse or other person related to the debtor within one year of the date of the bankruptcy can be set aside on the basis that the assets were undervalued Any transfer of property to a nonrelated person made within a oneyear period prior to bankruptcy may be declared void if the debtor is insolvent at the time of the transfer or would be made involvent by the transfer and the debtor made the transfer with the intention of defeating creditors If such transfer is to a spouse or other person related to the debtor then the period during with transfers are reviewable is extended to 5 years Consequently you could not protect your assets by transferring them to your spouse for 1 a few months before the bankruptcy Such a transfer could be declared void Even if bankruptcy did not occur a creditor could seek to set aside the transaction ...View the full answer

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