Loan from my wife is fraudulent transfer?

[donaldson]

What is the name of your state? Florida
After fighting for 3 years, I lost case in June 2019 and I owe the creditor 25,000. However, the creditor did not take any actions to collect the judgment (probably knowing that I have nothing much to collect). In May 2020, my wife loaned me 15,000 (by writing check on my name from her personal bank account, which I deposited in my personal bank account), interest free, when I wanted to buy a mobile home. We both executed a loan agreement. I withdrew that 15,000 currency from my bank account quickly, to purchase a mobile home. In March 2022 (just short of two years since I borrowed that loan from my wife), I repaid that loan by giving her 15,000 in currency (cash) as I could not buy home as planned, and she later deposited that 15,000 currency in her personal bank account. I am reading CHAPTER 726, fraudulent transfers http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0726/0726.html in which the creditor can dig my finances, loans (including this loan, taxes, money transfers, etc. for the last 4 years or more (which dates back to 2018 or earlier).


“726.201 Fraudulent loans void: When any loan of goods and chattels shall be pretended to have been made to any person with whom or those claiming under her or him, possession shall have remained for the space of 2 years without demand and pursued by due process of law on the part of the pretended lender, or where any reservation or limitation shall be pretended to have been made of a use or property by way of condition, reversion, remainder or otherwise in goods and chattels, and the possession thereof shall have remained in another as aforesaid, the same shall be taken, as to the creditors and purchasers of the persons aforesaid so remaining in possession, to be fraudulent within this chapter, and the absolute property shall be with the possession, unless such loan, reservation or limitation of use or property were declared by will or deed in writing proved and recorded.”


Now the creditor is planning to execute the judgment by looking into my finances. Whether there is any fraudulent transfer or fraudulent loan involved between me and my wife in this loan matter?

 

[Zigner]

Bona fide loans include payment of interest.

 

[quincy]

What is the name of your state? Florida

... Now the creditor is planning to execute the judgment by looking into my finances. Whether there is any fraudulent transfer or fraudulent loan involved between me and my wife in this loan matter?

If you simply gave back the money you were given by your wife, that would not be a fraudulent transfer, but the judgment creditor will no doubt question the source of the money when reviewing your finances.

A question: Why were you looking to purchase a mobile home with the money instead of paying on the judgment?

 

[adjusterjack]

Now the creditor is planning to execute the judgment by looking into my finances. Whether there is any fraudulent transfer or fraudulent loan involved between me and my wife in this loan matter?

I tend to agree with Quincy that you'll probably skate on the fraudulent transfer issue.

What were you trying to accomplish with that "loan" business. Having that $15,000 in your personal account was a stupid move. The creditor could have levied the account and gotten all of it.

Would have served you right, for trying to pull a dodge that wasn't necessary in the first place.

Now the creditor will have you under a microscope for a long, long time.

 

[donaldson]

I did some search. In Miles v. Katz, 405 So. 2d 750 (Fla. Dist. Ct. App. 1981), court entered:

“A debtor's preferential transfer of property to a creditor [in this case, to my wife] cannot be declared fraudulent as to other creditors [in this case, the judgment creditor], although the debtor in making it, intended to defeat their claims, and the preferred creditor had knowledge of such intention if the preferred creditor did not actually participate in the debtor's fraudulent purpose [i.e., if my wife did not help me in hiding my assets; which she did not]. See, Vickers v. Glenn, 102 Fla. 535, 136 So. 326 (1931). If the only purpose of the creditor is to secure his debt, and the property is not worth materially more than the debt [my wife took exactly what she gave me, therefore the property I returned to my wife is worth exactly the same as the debt I owe my wife], the transaction is not fraudulent. Nelson v. Cravero Constructors, Inc., 117 So. 2d 764 (Fla. 3rd DCA 1960). And this is so, although the preferred creditor knows that the debtor is insolvent, that the transfer is of all of the debtor's property, that there are other creditors, that the debtor is actuated solely by the desire to defraud his own creditors, and the effect of the debtor's action will be to defeat them. The preferred creditor, however, must act in good faith, but if he takes the conveyance for the purpose of aiding in the fraud, it is void.”



Based on above, it appears to me that my wife did not aid me in the fraud. I know this forum experts know far better than my layman interpretation.



By the way, between a wife and husband, no interest payment is needed (or to be reported to IRS) for the loans, if the loan is interest fee loan.
I forgot to mention: I kept that 15000 currency (loan) (given by my wife) with me trying shop mobile homes but was unsuccessful therefore I returned that money (loan) back to my wife.
[I can answer other questions such as why I tried to buy a home than paying to creditor, etc. later on, if you permit. Let us focus on fraudulent transfer matter]

 

[quincy]

I believe we already answered your question. Whether the judgment-creditor wants to claim there was a fraudulent transfer of funds is not something we can predict.

 

[donaldson]

726.201 Fraudulent loans void: When any loan of goods and chattels shall be pretended to have been made to any person with whom or those claiming under her or him, possession shall have remained for the space of 2 years without demand and pursued by due process of law on the part of the pretended lender, or where any reservation or limitation shall be pretended to have been made of a use or property by way of condition, reversion, remainder or otherwise in goods and chattels, and the possession thereof shall have remained in another as aforesaid, the same shall be taken, as to the creditors and purchasers of the persons aforesaid so remaining in possession, to be fraudulent within this chapter, and the absolute property shall be with the possession, unless such loan, reservation or limitation of use or property were declared by will or deed in writing proved and recorded.”



I have problem understanding/interpreting the above law. That is one of the reasons I contacted this forum. I added one more word “without” (highlighted in bold) as shown in the following paragraph. Is it correct?



726.201 Fraudulent loans void: When any loan of goods and chattels shall be pretended to have been made to any person with whom or those claiming under her or him, possession shall have remained for the space of 2 years without demand and without pursued by due process of law on the part of the pretended lender, or where any reservation or limitation shall be pretended to have been made of a use or property by way of condition, reversion, remainder or otherwise in goods and chattels, and the possession thereof shall have remained in another as aforesaid, the same shall be taken, as to the creditors and purchasers of the persons aforesaid so remaining in possession, to be fraudulent within this chapter, and the absolute property shall be with the possession, unless such loan, reservation or limitation of use or property were declared by will or deed in writing proved and recorded.”





To make 726.201 much simpler (for my understanding purpose), I modified 726.201 and rewrote below (to apply 726.201 to my current situation) . Is this also (reasonably!) correct?





When a loan is given by person X to person Y and there is no demand from X for that loan's repayment for 2 years AND there is no due process of law from Y (i.e., X did not file a lawsuit (or legal action) on Y for the loan repayment), then any payment (in the name of repayment of such loan) from Y to X is a fraudulent transfer from Y to X.

 

[adjusterjack]

We (Quincy and I) don't think you made a fraudulent transfer and we're not going to sit here all day reading statutes.

Hire a lawyer.

 

[Zigner]

You need to speak to an attorney.

 

[doucar]

No one here practices in Florida and I would suggest you see a collection attorney and get an opinion from someone who may know.

 

[donaldson]

Thanks all of you.

 

[quincy]

Thanks all of you.

You’re welcome. We all appreciate the thanks, so thank you.

Good luck.