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FiveStarLaw
FiveStarLaw, Attorney
Category: Bankruptcy Law
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Experience:  Bankruptcy Lawyer. Experienced.
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Can a U.S. Bankruptcy Court Trustee asking for summary judgment

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Can a U.S. Bankruptcy Court Trustee asking for summary judgment based on insider status; supersede a judgment order for moneys owed to this defendant in a Disillusion of marriage case in Maricopa County Arizona five years before? This payment was to be paid in full within two years of finalizing the divorce in which this obligation was not met. The person who filed for bankruptcy cashed in an annuity from her mother’s will to pay some of her debts to myself and other family members and then filed for BK nine months later. (This insider status was documented within the BK documents). This annuity being cashed in, if my facts are correct was significantly more than the amount that was paid to this defendant. (One question is, where is the rest of that money and why didn’t the trustee investigate this further?) The Trustee is claiming that the person that filed for BK became insolvent because this money was paid to this defendant. The fact of this annuity was not mentioned in the bankruptcy documents; only the fact that moneys were paid to me in the form of Cashier Check. In addition, the defendant (BK filer) in this disillusion of marriage case was in contempt of court for none payment in the required period described therein. As I am defending myself, please answer in detail, what arguments can be made to defend against this bankruptcy Trustee?
Submitted: 2 years ago.
Category: Bankruptcy Law
Expert:  FiveStarLaw replied 2 years ago.
*This chat is not intended as legal advice. It is general information that may or may not apply to your situation and should not be relied upon.*

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It sounds like the trustee has raised the issue of a voidable preference under Bankruptcy Code §547 or a fraudulent transfer under Bankruptcy Code §548. Let me explain.

I A transfer of the debtor’s assets to a creditor that results in a creditor receiving more than the creditor would have in a Chapter 7 bankruptcy, is typically considered a “preference".

Bankruptcy Code §547 provides for the avoidance of preferential transfers within 90 days before the bankruptcy filing date for third parties. Transfers to insiders are subject to a longer avoidance reach back of one year.

In order to set aside the transfer, it is not necessary for the trustee to prove that insolvency resulted from the transfer. All that is necessary is for the trustee to prove that the transfer occurred within one year of filing bankruptcy, that the money was past due and that the funds were paid to an insider.

Your best argument might be to dispute that you are an insider. If you are not an insider, the 90 day period would apply instead of 180 days.

II. Bankruptcy Code §548 is the "fraudulent conveyance" statute. It can be used to claw back a transfer of a debtor's assets to a third party, for less than a reasonably equivalent value, regardless of whether the 3rd party is an insider

Bankruptcy Code §548 provides for the avoidance of fraudulent transfers within two years before the bankruptcy filing date if the debtor was insolvent on the date that the transfer was made or became insolvent as a result of such transfer or obligation.

Unfortunately §548 does not require that the transfer be made to an insider and therefore your facts do not support a defense to a §548 claw back.

However you may prevail on an argument that the debt owed to you a domestic support obligation and therefore discharged. This would leave you able to attempt to collect the debt from the debtor after discharge

If you would take a moment to click the rating tab to rate my work, I would appreciate it. My goal is EXCELLENT and I hope your rating reflects that.
Customer: replied 2 years ago.

So, the fact that the BK filer possibly withheld information has no weight in the eyes of the court?


Doesn't a court order that is in contempt because moneys were not paid within the two year agreement argument enough to negate insider status?


There was no preference due to this fact. Does this hold water?


I am defending myself in this case.

Expert:  FiveStarLaw replied 2 years ago.
So, the fact that the BK filer possibly withheld information has no weight in the eyes of the court?
The fact that the bankruptcy filer omitted information from the petition does not affect the ability of the bankruptcy court to claw back funds from the recipient. The funds recovered will be disbursed to all creditors on a pro rata basis


Doesn't a court order that is in contempt because moneys were not paid within the two year agreement argument enough to negate insider status?
The fact that you are divorced may be sufficient to negate insider status however insider status is only required under 547 and is not required under 548


There was no preference due to this fact. Does this hold water?
No it does not. A preference exists simply because monies were paid on a past-due debt


I am defending myself in this case.
Bankruptcy is an extremely complex subspecialty of the law. I do not recommend representing yourself in a bankruptcy proceeding. Consider retaining an attorney who specializes in bankruptcy

You may be able to mitigate your losses by asking the Court to rule that the debt is a nondischargeable domestic support obligation. This would allow you the option to attempt to collect the debt at the conclusion of the bankruptcy from the debtor
FiveStarLaw, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36555
Experience: Bankruptcy Lawyer. Experienced.
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