Head of family debtor's savings can be attached?

[riggins33]

What is the name of your state? FLORIDA
Judgment debtor has been cashing his salary check every month and “spending” cash, with no trace about spending details. Recently he started depositing some of that salary in a tenancy by entirety account. He is head of family http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0200-0299/0222/Sections/0222.11.html

“Earnings that are exempt under subsection (2) and are credited or deposited in any financial institution are exempt from attachment or garnishment for 6 months after the earnings are received by the financial institution if the funds can be traced and properly identified as earnings.”

Does this money in the tenancy by entirety account can be attached under 222.30 Fraudulent asset conversions? http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0200-0299/0222/Sections/0222.30.html

“Any conversion by a debtor of an asset that results in the proceeds of the asset becoming exempt by law from the claims of a creditor of the debtor is a fraudulent asset conversion as to the creditor, whether the creditor’s claim to the asset arose before or after the conversion of the asset, if the debtor made the conversion with the intent to hinder, delay, or defraud the creditor.”

 

[doucar]

No

 

[adjusterjack]

We've had several discussions about fraudulent transfers, even another one in Florida.

There are so many ways that a debtor can legally safeguard his cash and avoid paying the judgment.

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Just because you can't get at his money, doesn't make it a fraudulent transfer.

 

[riggins33]

I do agree the debtor can safeguard legally. However, his head of family status protects his money in a financial institution for 6 months, but according to 222.30 Fraudulent asset conversions, he converted this earlier process of cashing the salary check to depositing in a tenancy by entirety account, for the purpose of making that money exempt from attachment. Further, if he deposited it a single account on his name alone then, after 6 months, I would have attached that money but he chose to put it in tenancy by entirety account which made that money becoming exempt by law from the claims of the creditor, after 6 months also, therefore it is Fraudulent asset conversions. Are these not enough to prove that there is Fraudulent asset conversion?

Is it true that any debtor, who is head of family, can deposit his salary in a tenancy by entirety bank account which will make that money exempt for 6 months due to head of family status, but also exempt beyond 6 months due to tenancy by entirety status? If this is true then the purpose of preventing Fraudulent asset conversions is nullified.

 

[LdiJ]

I do agree the debtor can safeguard legally. However, his head of family status protects his money in a financial institution for 6 months, but according to 222.30 Fraudulent asset conversions, he converted this earlier process of cashing the salary check to depositing in a tenancy by entirety account, for the purpose of making that money exempt from attachment. Further, if he deposited it a single account on his name alone then, after 6 months, I would have attached that money but he chose to put it in tenancy by entirety account which made that money becoming exempt by law from the claims of the creditor, after 6 months also, therefore it is Fraudulent asset conversions. Are these not enough to prove that there is Fraudulent asset conversion?

Is it true that any debtor, who is head of family, can deposit his salary in a tenancy by entirety bank account which will make that money exempt for 6 months due to head of family status, but also exempt beyond 6 months due to tenancy by entirety status? If this is true then the purpose of preventing Fraudulent asset conversions is nullified.

So, you are saying that a debtor should be prohibited by law from having a joint bank account with his/her wife/husband? I cannot see you making that one fly. I also cannot see you proving that any money you tried to attach, was the exact money deposited in the account six months prior, if the account is an active one used to pay regular bills and expenses.

 

[riggins33]

As I said in my initial email, “Recently he started depositing some of that salary in a tenancy by entirety account.” the money in that account is getting accumulated, e.g., 500 each month, for almost 10 months (e.g., a total of $5000), and is never used by debtor for any purpose (taht is, now thata ccount has e.g., $5000 = 10 months times 500 each month). If he was depositing the same money, and in the same manner, in a single account on his name alone, I would have attached the money ($2000) which is older than 6 months sitting in that account. But it is a tenancy by entirety account. Whether the tenancy by entirety status of that account and his head of family status (which is good for 6 months salary deposits only) will help the debtor from stopping me from attaching the money in that account which is older than 6 months?

 

[adjusterjack]

he converted this earlier process of cashing the salary check to depositing in a tenancy by entirety account, for the purpose of making that money exempt from attachment.

if the debtor made the conversion with the intent to hinder, delay, or defraud the creditor.”

Do you have a recording of his thought processes?

No?

Didn't think so.

If this is true then the purpose of preventing Fraudulent asset conversions is nullified.

No, it's not. In your case it just doesn't apply because he didn't make a fraudulent conversion, he made a legal conversion.

The laws aren't designed to impoverish debtors for the benefit of creditors. Even bankruptcy allows (to a certain extent) a debtor to keep his house, his car, many personal belongings, cash, and his post bankruptcy income.

 

[LdiJ]

As I said in my initial email, “Recently he started depositing some of that salary in a tenancy by entirety account.” the money in that account is getting accumulated, e.g., 500 each month, for almost 10 months (e.g., a total of $5000), and is never used by debtor for any purpose (taht is, now thata ccount has e.g., $5000 = 10 months times 500 each month). If he was depositing the same money, and in the same manner, in a single account on his name alone, I would have attached the money ($2000) which is older than 6 months sitting in that account. But it is a tenancy by entirety account. Whether the tenancy by entirety status of that account and his head of family status (which is good for 6 months salary deposits only) will help the debtor from stopping me from attaching the money in that account which is older than 6 months?

I can tell you that if the account was just in his name, he would never have deposited any money in the account.

 

[riggins33]

Section 222.30 Fraudulent asset conversions http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0200-0299/0222/Sections/0222.30.html is as follows:

(1) As used in this section, “conversion” means every mode, direct or indirect, absolute or conditional, of changing or disposing of an asset, such that the products or proceeds of the asset become immune or exempt by law from claims of creditors of the debtor and the products or proceeds of the asset remain property of the debtor. The definitions of chapter 726 apply to this section unless the application of a definition would be unreasonable.

(2) Any conversion by a debtor of an asset that results in the proceeds of the asset becoming exempt by law from the claims of a creditor of the debtor is a fraudulent asset conversion as to the creditor, whether the creditor’s claim to the asset arose before or after the conversion of the asset, if the debtor made the conversion with the intent to hinder, delay, or defraud the creditor.


Chapter 726 Fraudulent Transfers http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0726/0726.html is as follows:

(1) A transfer made or 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:

(a) With actual intent to hinder, delay, or defraud any creditor of the debtor; or

(b) Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:

1. 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

2. Intended to incur, or believed or reasonably should have believed that he or she would incur, debts beyond his or her ability to pay as they became due.

(2) In determining actual intent under paragraph (1)(a), consideration may be given, among other factors, to whether:

(a) The transfer or obligation was to an insider.

(b) The debtor retained possession or control of the property transferred after the transfer.

(c) The transfer or obligation was disclosed or concealed.

(d) Before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit.

(e) The transfer was of substantially all the debtor’s assets.

(f) The debtor absconded.

(g) The debtor removed or concealed assets.

(h) The value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred.

(i) The debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred.

(j) The transfer occurred shortly before or shortly after a substantial debt was incurred.

(k) The debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor.







If you see the above two i.e., 222.30 and 726 (some portions are emphasized by me):



222.30 states about “intent” or "the intent" (not “actual intent”) and nothing is provided on how to determine “intent” or "the intent".



However, 726 states about “actual intent” only (not “intent” alone) and there are some tests provided on how to determine that “actual intent”.



And 222.30 states that the definitions of chapter 726 apply to this section (i.e., to section 222.30) unless the application of a definition (from 726) would be unreasonable (to apply in 222.30).



The question is: whether the “actual intent” in 726 is same as “intent” or "the intent" in 222.30? Say it in another way, the tests mentioned in 726 to determine “actual intent” are applicable to determine "the intent" or “intent” in 222.33 also? If not, how “intent” or "the intent" in 222.33 will be determined?

 

[doucar]

This has been debated before Read the links that adjusterjack listed in his first response and we won't have to continue to repeat ourselves. Or you can spend the money and take the debtor to court to get the opinion of one judge, who may or may not agree with our analysis.

 

[riggins33]

I read the first and last links that adjusterjack listed as they are related to Florida. They are taking about Chapter 726 Fraudulent Transfers, but my question is on 222.30 and did not see the specific answer. Any way, I appreciate the answers you already provided, thank you.

 

[BuyLowSellHigh]

I think you may be looking at the income incorrectly. If they are married then the income is a marital asset. They aren't converting anything by depositing a marital asset into a joint account.

 

[adjusterjack]

but my question is on 222.30 and did not see the specific answer.

If you are asking if there is a difference between "intent" and "actual intent" no there is not.

Doesn't really matter if he intended to "hinder, delay, or defraud" you. He found a "legal" way to do it.

 

[riggins33]

“BuyLowSellHigh: Thank you and I will come back to you on the matter of marital assets. Let me address adjusterjack.

adjustejack:

You said Doesn't really matter if he intended to "hinder, delay, or defraud" you. He found a "legal" way to do it.
Please let me know whether that “legal way” is created

(i). BECAUSE his wages should not be garnished due to his head of family status (because of which his wages should not be garnished directly from employer http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0200-0299/0222/Sections/0222.11.html )

OR

(ii) BECAUSE “Earnings that are exempt under subsection (2) and are credited or deposited in any financial institution are exempt from attachment or garnishment for 6 months after the earnings are received by the financial institution if the funds can be traced and properly identified as earnings” http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0200-0299/0222/Sections/0222.11.html ) and he recently started depositing his (part of the) salary in tenancy by entirety account?

Which of the above one or both of them together is protecting the debtor from me? Please let me know.

If you take another state Texas (you cited a case from Texas earlier), in which “wage garnishment is prohibited by the Texas Constitution except for a few kinds of debt: child support, spousal support, student loans, or unpaid taxes. A debt collector cannot garnish your wages for ordinary debts.” https://guides.sll.texas.gov/debt-collection/collecting-the-debt . However, in Texas, there is no law that is similar to the following Florida law that is there for head of family: “Earnings that are exempt under subsection (2) and are credited or deposited in any financial institution are exempt from attachment or garnishment for 6 months after the earnings are received by the financial institution if the funds can be traced and properly identified as earnings”

Therefore, any debtor from Texas started depositing his salary in a tenancy by entirety account created in Florida bank (because Florida has tenancy by entirety) then that debtor’s salary is fully protected (and will not come under Texas fraudulent transfer law is: https://statutes.capitol.texas.gov/Docs/BC/htm/BC.24.htm), even if that salary was getting deposited (in the past) in a single account (on debtor’s name alone) in Texas or in Florida?

 

[adjusterjack]

If you think you have evidence of a fraudulent transfer, go to court and prove it.