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TexLaw
TexLaw, Attorney
Category: Legal
Satisfied Customers: 4430
Experience:  Lead trial/International commercial attorney licensed 11 yrs
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I was the 100 % shareholder of 2 indiana corps in 2010 when

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I was the 100 % shareholder of 2 indiana corps in 2010 when i received a judgement against me for their attorney fees of 50000 . In 2011 i awarded my wife 100 % shares of one of the companys & 99 shares on the other corp. I am not trying to hide this transaction ! The judgement is in my sole name only . So were the corperations at the time of the judgement . Can the corperations become liabily for this dept now ? Is there anyway that my wife can protect these corperations now ?
Hi,

Thank you for your question.

When you transfer assets after a money judgment has been issued against you, it can trigger a law called the Fraudulent Transfer Act. The main provision at play here is:

IC 32-18-2-14
Transfers fraudulent as to present and future creditors
Sec. 14. A transfer made or an obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:
(1) with actual intent to hinder, delay, or defraud any creditor of the debtor; or
(2) without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:
(A) was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or
(B) intended to incur or believed or reasonably should have believed that the debtor would incur debts beyond the debtor's ability to pay as the debts became due.

If you are not going to pay the money judgment against you personally and you did not receive an adequate amount of compensation for the exchange of stock to your wife, then the transaction could be reversed.

Whether the company itself could become liable is probably not at play here. However, any transfer of assets to the company which violates the above-referenced section could also be reversed if discovered by the judgment creditor.

That being said, the transfer has to be discovered to be acted on. If you either settle the judgment or enter into a payment plan on it, you could protect your self against this ever becoming an issue.

Please let me know if you need further information.

-ZDN
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Customer: replied 4 years ago.


so minus well say the 2 indiana corps are in my name only at this point as well as the judgement is in my name only . but i have to disclose all joint tax returns ? all joint bank accounts ? all joint properties owed ?that because these business 's are in my name only that any assets they have can be taken ?

Because the judgment is against you personally, anything in which you have an interest in is subject except the following:

(1) Real estate or personal property constituting the personal or family residence of the debtor or a dependent of the debtor, or estates or rights in that real estate or personal property, of not more than fifteen thousand dollars ($15,000). The exemption under this subdivision is individually available to joint debtors concerning property held by them as tenants by the entireties.
(2) Other real estate or tangible personal property of eight thousand dollars ($8,000).
(3) Intangible personal property, including choses in action, deposit accounts, and cash (but excluding debts owing and income owing), of three hundred dollars ($300).
(4) Professionally prescribed health aids for the debtor or a dependent of the debtor.
(5) Any interest that the debtor has in real estate held as a tenant by the entireties. The exemption under this subdivision does not apply to a debt for which the debtor and the debtor's spouse are jointly liable.
(6) An interest, whether vested or not, that the debtor has in a retirement plan or fund to the extent of:

(A) contributions, or portions of contributions, that were made to the retirement plan or fund by or on behalf of the debtor or the debtor's spouse:
(i) which were not subject to federal income taxation to the debtor at the time of the contribution; or
(ii) which are made to an individual retirement account in the manner prescribed by Section 408A of the Internal Revenue Code of 1986;
(B) earnings on contributions made under clause (A) that are not subject to federal income taxation at the time of the levy; and
(C) roll-overs of contributions made under clause (A) that are not subject to federal income taxation at the time of the levy.
(7) Money that is in a medical care savings account established under IC 6-8-11.
(8) Money that is in a health savings account established under Section 223 of the Internal Revenue Code of 1986.
(9) Any interest the debtor has in a qualified tuition program, as defined in Section 529(b) of the Internal Revenue Code of 1986, but only to the extent funds in the program are not attributable to:
(A) excess contributions, as described in Section 529(b)(6) of the Internal Revenue Code of 1986, and earnings on the excess contributions;
(B) contributions made by the debtor within one (1) year before the date of the levy or the date a bankruptcy petition is filed by or against the debtor, and earnings on the contributions; or
(C) the excess over five thousand dollars ($5,000) of aggregate contributions made by the debtor for all programs under this subdivision and education savings accounts under subdivision (10) having the same designated beneficiary:
(i) not later than one (1) year before; and
(ii) not earlier than two (2) years before;
the date of the levy or the date a bankruptcy petition is filed by or against the debtor, and earnings on the aggregate contributions.
(10) Any interest the debtor has in an education savings account, as defined in Section 530(b) of the Internal Revenue Code of 1986, but only to the extent funds in the account are not attributable to:
(A) excess contributions, as described in Section 4973(e) of the Internal Revenue Code of 1986, and earnings on the excess contributions;
(B) contributions made by the debtor within one (1) year before the date of the levy or the date a bankruptcy petition is filed by or against the debtor, and earnings on the contributions; or
(C) the excess over five thousand dollars ($5,000) of
aggregate contributions made by the debtor for all accounts under this subdivision and qualified tuition programs under subdivision (9) having the same designated beneficiary:
(i) not later than one (1) year before; and
(ii) not earlier than two (2) years before;
the date of the levy or the date a bankruptcy petition is filed by or against the debtor, and earnings on the excess contributions.
(11) The debtor's interest in a refund or a credit received or to be received under the following:
(A) Section 32 of the Internal Revenue Code of 1986 (the federal earned income tax credit).
(B) IC 6-3.1-21-6 (the Indiana earned income tax credit).
(12) A disability benefit awarded to a veteran for a service connected disability under 38 U.S.C. 1101 et seq. This subdivision does not apply to a service connected disability benefit that is subject to child and spousal support enforcement under 42 U.S.C. 659(h)(1)(A)(ii)(V).
(13) Compensation distributed from the supplemental state fair relief fund under IC 34-13-8 to an eligible person (as defined in IC 34-13-8-1) for an occurrence (as defined in IC 34-13-8-2). This subdivision applies even if a debtor is not domiciled in Indiana.


In regard to any tax refund, if it is joint and it is also owed to your wife, then you must make sure that you have it deposited into your wife's independent bank account.

Now, when you say disclose, I'm not sure what you mean. Are you answering discovery requests about your assets?
Customer: replied 4 years ago.


yes , you seem to really know alot about this kind of civil suit in which im really glade ! pretty much i have to produce any joint bank accounts & it seems that the business is not protected just because they are corporations doesnt matter because they both are considered in my name only because ownership was given to my wife ? My wife earned it because since the day i incorperated shes been by my side working . then the homes we bought over the years we were told by our accountant to incorperate for protection & tax reasons . I beleived the judgement for attorney fees of 50000 was crazy when i spent under 13000 & have had 3 different attorneys with this case . so the corporate vail can be pierced so to speak ?

Hi,

Thanks for clarifying.

The discovery requests that ask about anything that is not limited to your personal assets should be objected to on the grounds that it is overly broad and seeks irrelevant information. So, you object to these requests and refuse to produce the information unless ordered by the court. Especially in regard to your corporation's assets and your wife's separate assets and confidential information. Produce the information only about yourself.

That being said, they are entitled to discover the transfer of the stock and may seek to have it cancelled.

Any asset that has been transferred from you personally into the corporation may be taken back too through a fraudulent transfer act claim if it meets the standard stated above.

As far as the value of the corporation itself, they may be able to get to it as well because you are the owner. Piercing the corporate veil in this situation doesn't really apply. That's the other way, when the corporation is sued and the plaintiff wants to get to your personal assets too. Since you have a personal interest in the corporation (or used to) by being the 100% owner, they could take the stock, and then they become owner of the corporation.

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