Transfer of Assets in fraud of creditors?

[GoingDown]

A "friend" recently asked me a question and since I wasn't sure about the answer, I'm bringing it to the BK Forum for answers...

"Jeremy" took cash advances from his credit cards and ended up with about $130,000 in cash. He then purchased a forclosed house at auction for $130,000. He wants to transfer the title to the house out of his name and into the name of one of his relatives, "Bob." Then "Jeremy" would simply stop making any more minimum payments on his credit cards. He owes one of these credit cards about $98,000.

He does not intend to file bankruptcy for a few years.

His question is... what would happen to "Bob"? Would this be fraud? Would the credit card company file a lawsuit against "Bob" to get the house and the money back?

I told "Bob" that it may be considered fraud, and that it is not a good idea, but "Bob" wanted to hear what other people thought about it.

[jerzey]

Fraud

Conspiracy to commit fraud, actually

[GoingDown]

Fraud

Conspiracy to commit fraud, actually

What would be the result for "Bob" ?

Would he face any jail time?

Would he face a lawsuit?

[jerzey]

Hard to say
"BoB" would have to prove he knew nothing of this and took the home as a gift
But he would have taxes and such plus the debate would be "well "bob" you knew "Jermey" was going BK why did you take this home"

IMO the judge would see right through it,seeing all the mortgage fraud right now I would avoid this If I was Bob or Jeremy

[GoingDown]

Thanks for the info. "Bob" will be reading this later.

[jerzey]

Thanks for the info. "Bob" will be reading this later.

I hope "bob" is smart and stays clear of this type of "deal"

[jwbbx]

Someone with more legal expertise than I will chime in I hope, but in the situation you describe I think the fraud actually happens way before the BK filing.

When he takes the cash advance, he must sign that he intends to pay it back per card holder agreement yada yada yada.

If he pays nothing and never intended to pay anything, that's where the fraud lies. The fact that he transferred the asset just shows more bad intent right?

So basically the CC company could file a complaint and begin the process of criminal prosecution well before he decided to file BK.

Am I correct in this or am I all wet??

[Cali]

It is considered fraud. And if Bob knows about this beforehand, he can face jail time along with Jeremy. This is 5-7 yrs in jail and maybe a fine.

[Flamingo]

Thanks for the info. "Bob" will be reading this later.

Easily traceable fraud with jailtime for both involved if discovered.

[CindyLou]

Plus when he files BK the trustee can reverse the transaction and sell the house to pay the creditors.

[BigJohn]

Jeremy doesn't plan on filing BK for a few years, so I think you have to look to see if Jeremey is judgment proof. If he bought the house in Bob's name, it probably would be harder to follow the money trail.

[Flamingo]

Jeremy doesn't plan on filing BK for a few years, so I think you have to look to see if Jeremey is judgment proof. If he bought the house in Bob's name, it probably would be harder to follow the money trail.

Bob right now is in a safe place and had better stay there if he is smart! Doesn't take much to search public paper records and if I remember correctly, we were asked prior to filing our Chapter 13 if we had transferred any real estate or property over a certain value within 3 years (may have been 5 years) prior to filing. That time period may vary state to state but the risk in the entire venture is just too great because some trustees can smell fraud a mile away.

[Birn]

This is clear fraud. Don't even think about it unless you want to go to jail. Mortgage fraud and credit card abuse are very seriously investigated these days.

[JRScott]

A "friend" recently asked me a question and since I wasn't sure about the answer, I'm bringing it to the BK Forum for answers...

"Jeremy" took cash advances from his credit cards and ended up with about $130,000 in cash. He then purchased a forclosed house at auction for $130,000. He wants to transfer the title to the house out of his name and into the name of one of his relatives, "Bob." Then "Jeremy" would simply stop making any more minimum payments on his credit cards. He owes one of these credit cards about $98,000.

He does not intend to file bankruptcy for a few years.

His question is... what would happen to "Bob"? Would this be fraud? Would the credit card company file a lawsuit against "Bob" to get the house and the money back?

I told "Bob" that it may be considered fraud, and that it is not a good idea, but "Bob" wanted to hear what other people thought about it.

What will happen....

1. When the Trustee finds out he will reverse the transfer of property, it will then no longer be Bob's it will be Jeremy's.

2. He will dismiss Jeremy's case with prejudice.

3. He will charge Jeremy with bankruptcy fraud.

4. Jeremy may be spending some time in the jail.

5. Bob can be charged as a accessory to bankruptcy fraud.

6. Bob could also be spending some time in the jail.

7. No doubt Jeremy even after serving his time will find he still owes all that money and cannot refile on it.

[Help!]

Plus when he files BK the trustee can reverse the transaction and sell the house to pay the creditors.

And this would be the best case scenario.