Fraudulent Conveyance lawsuits are brought in many different situations.
If you’ve been sued for fraudulent transfer, or fraudulent conveyance, it may be as a result of your receiving real property (a residence or land), money or other property.
Whatever the circumstances, you are now facing a fraudulent conveyance lawsuit, and the stakes are high. Fortunately, there are ways to defending a fraudulent conveyance lawsuit. With the right bankruptcy attorney, you may have some hope of successfully defending the fraudulent conveyance lawsuit.
There are steps you can take to ensure that you have the best chance of defending a fraudulent conveyance lawsuit.
By following these helpful tips, you may be able to get back to life without the dread of handling a lawsuit on your own.
1. HIRE AN EXPERIENCED ATTORNEY. Fraudulent conveyance lawsuits aren’t easy cases to defend. You must hire an attorney who has defended similar cases and understands the system. Find an attorney with experience on all sides of a fraudulent transfer case – both prosecuting the case and defending the case – you can rest easy that you are in good hands. Of course, it’s important to ask the right questions. Be sure to ask the attorney about her knowledge of trustees’ and creditor attorneys’ expectations in these cases. A lawyer who understands the motivation and strategy on all sides of a fraudulent transfer case is in the best position to defend you.
2. STAY ORGANIZED. A trustee will be looking for certain indicators of fraudulent transfers: transactions with insiders and transfers that appear to have unfairly benefited the recipient. Therefore, if you received property from your cousin who later files for bankruptcy (even if the filing is several years after the transfer), you are a target. If you paid someone significantly less than the value of an item, that is also suspect. In order to best help your case, keep good records of your transactions. If you can show that you paid market value for the item, you should be able to keep the goods. Similarly, if the transfer was made to repay you for a preexisting debt, that may be a strong defense, depending on the timing of the underlying obligation and transfer. Organization is crucial: keep a paper trail of any money you loan to friends or relatives. Avoid loaning money in a manner that cannot be easily traced back to you, such as cash. Be sure to hand over all records to your attorney.
3. UNDERSTAND YOUR RIGHTS. Just because you received money or goods from someone who filed bankruptcy doesn’t make you liable in all cases. If you can show that you received the goods in good faith and paid fair market value, you may have a valid defense to this fraudulent transfer suit. Similarly, you may have a valid defense if the debtor was not insolvent at the time of the transfer. If the transfer of goods was made in order to satisfy a preexisting debt, it’s important to tell your attorney.
4. FIGHT THE LAWSUIT. Being sued for fraudulent transfer is not necessarily an “all or nothing” matter. A knowledgeable attorney can often reach a settlement agreement with the trustee that requires a much lower payment than the amount demanded in the lawsuit. An attorney who understands the big picture will attempt to negotiate a settlement for your case.
Defending a fraudulent conveyance lawsuit is not a simple task. It is vital to have an attorney examine the issues pertaining to your case so that you have a good understanding of the risks and options involved.
[Read more about Navigating a California Fraudulent Transfer Lawsuit]