Debtor: Gave my salary as gift to my friends

[albertstm]

What is the name of your state? FL
Lost a civil case in 2019. I have my child (I was single parent) living with me and depending on me for all financial needs until 2021. I have job until 2021. After that, the child became adult and got a job and living elsewhere and no longer depending on me for anything. Between 2019 and 2021, I gave large portion of my salary (as soon as the salary is deposited in my bank account) as gift to my friends and relatives. I did this hoping that I am head of family therefore my salary is exempt from the creditor (for six months, once it is deposited in my bank account) therefore I can do whatever I can with that salary within six months after it is deposited in my bank account. http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0200-0299/0222/Sections/0222.11.html All these years, creditor did not make any attempt to execute the judgment. Last week, the creditor filed fraudulent transfer claims http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0726/0726.html against me for transferring my salary as gift to my friends and relatives between 2019 and 2021. Please help me!

 

[adjusterjack]

222.11 exempts your wages for six months from the date of deposit. It DOES NOT say you can DO WHATEVER YOU CAN with it.

Seems obvious to me that you gave that money to friends and relatives so that it would not be available for garnishment after the 6 months of each deposit expired.

What did your friends and relatives do FOR YOU in exchange for that money?

I hope to heck that they have just been holding it for you. Because, if you lose on this, the creditor will go after your friends and relatives to get the money back from them.

What you did certainly appears to conform to the definition of fraudulent transfer.

 

[Eekamouse]

What is the name of your state? FL
Lost a civil case in 2019. I have my child (I was single parent) living with me and depending on me for all financial needs until 2021. I have job until 2021. After that, the child became adult and got a job and living elsewhere and no longer depending on me for anything. Between 2019 and 2021, I gave large portion of my salary (as soon as the salary is deposited in my bank account) as gift to my friends and relatives. I did this hoping that I am head of family therefore my salary is exempt from the creditor (for six months, once it is deposited in my bank account) therefore I can do whatever I can with that salary within six months after it is deposited in my bank account. http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0200-0299/0222/Sections/0222.11.html All these years, creditor did not make any attempt to execute the judgment. Last week, the creditor filed fraudulent transfer claims http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0726/0726.html against me for transferring my salary as gift to my friends and relatives between 2019 and 2021. Please help me!

You don't get to decide that you want to cheat a creditor out of their rightful judgement against you. What if the shoe was on the other foot and you had won your case and they tried to cheat you the same way? That would have not been cool at all, would it have been? So why do you think it's different for you?

 

[albertstm]

Chapter 726 at http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0726/0726.html is as follows
726.102 (2) “Asset” [which can be claimed by a creditor under fraudulent transfer] means property of a debtor, but the term does not include:
(b) Property to the extent it is generally exempt under nonbankruptcy law; or


From above, chapter 726 fraudulent transfer claims may be made on non-exempt assets only. However
Statute 222.11 at http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0200-0299/0222/Sections/0222.11.html is as follows for head of family:
222.11 (3) 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 my salary is exempt for 6 months in the bank, and I gave that salary as gift while it is in exempt status therefore creditor cannot make fraudulent transfer claims on that exempt asset.

Is there a mistake in my argument/interpretation?



Further,

https://www.floridabar.org/the-florida-bar-journal/so-this-isnt-workwhen-a-wage-isnt-protected/ (from Florida Bar Journal) states

F.S. §222.11 provides the exemption at issue. Specifically, earnings of a head of family that are less than or equal to $500 a week are absolutely exempt from garnishment.1 Further, disposable earnings greater than $500 per week are exempt unless the individual agrees otherwise in writing.

These earnings may be invested in other types of exempt assets (including, e.g., homestead, certain annuities, and life insurance) without the transfer being considered fraudulent under the Fraudulent Conveyance Act. Exempt earnings deposited into a bank account are exempt for six months after deposit, as long as the funds are traced and properly identified as earnings.

Thus, if Mr. Jones earns $500 weekly and has creditor issues, theoretically he could use the earnings to support himself and his family, and he could take any excess and pay down his mortgage on his Florida homestead (another exempt asset) without fear that creditors will garnish the extra earnings. Earnings over $500 per week would also be creditor-exempt if Mr. Jones had not otherwise agreed in writing.


Rather than buying exempt assets from the remaining money in my bank account (where my salary gets deposited), I gifted to my friend and relatives by directly transferring that remaining money to their accounts within 6 months.

 

[adjusterjack]

I gifted to my friend and relatives by directly transferring that remaining money to their accounts within 6 months.

For the sole purpose of making the money unavailable to creditors after six months when it would have been available to creditors after six months had the money remained in your account.

Thus, if Mr. Jones earns $500 weekly and has creditor issues, theoretically he could use the earnings to support himself and his family, and he could take any excess and pay down his mortgage on his Florida homestead (another exempt asset) without fear that creditors will garnish the extra earnings. Earnings over $500 per week would also be creditor-exempt if Mr. Jones had not otherwise agreed in writing.

That's right. But you didn't do that. Had you used your earnings each month for your living expenses, even if they were extravagant living expenses, you would have been home free.

Pay more attention to the definition of fraudulent transfer in 726.106 than to your delusions of loophole.

And give your friends and relatives a heads up that they may be served with court papers demanding the return of the money.

 

[not2cleverRed]

Is there a mistake in my argument/interpretation?

Yes.

Hopefully you considered befriending a lawyer, and gifting a retainer fee.

 

[Taxing Matters]

Rather than buying exempt assets from the remaining money in my bank account (where my salary gets deposited), I gifted to my friend and relatives by directly transferring that remaining money to their accounts within 6 months.

I suggest you consult an attorney in FL who handles credit issues for debtors. And do so quickly given that the creditor is now pursuing a fraudulent conveyance action. Only someone well familiar with Florida's case law (court decisions) that interpret the statutes can tell you with any degree of certainty whether the Florida courts would consider that a fraudulent conveyance. The problem that I see here is that you did not replace one exempt asset with another; you took that asset and simply gave it away. Those gifts are not "exempt assets" of yours. What you did will raise several questions, like whether you really made true gifts to friends and relatives with no strings attached, or if the real deal was that they'd hold that money for you to keep it from creditors. I don't practice in Florida and can't tell you how the courts are likely to view this. So far as I know, no one else who regularly participates on these boards is a Florida lawyer, either. You need to find a Florida lawyer to help you.

 

[albertstm]

Thanks.
chapter 726 at http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0726/0726.html states that exempt assets cannot come under fraudulent transfer:
726.102 (2) “Asset” [which can be claimed by a creditor under fraudulent transfer] means property of a debtor, but the term does not include:
(b) Property to the extent it is generally exempt under nonbankruptcy law; or

If I have a tenancy by entirety (TBE) land with my spouse or a homestead on my name alone (and we purchased it years before the lawsuit filed) then the land/homestead is exempt from creditors (there are many case laws). I (and my spouse) can do whatever we want with that land/homestead (at any time), including directly gifting it to my friends without the fear of fraudulent transfers (there are many case laws on this also). This is because of the fact that the TBE land or homestead is exempt from creditors. Similarly, the salary in my bank account is exempt for 6 months and I can do whatever with that, including gifting to my friends by directly wire transferring it my friends’ account within 6 months.

However, you are saying that my salary, which is exempt asset for the first 6 months once it is deposited, can be replaced by another exempt asset on my name only (but cannot be gifted). How? Why? Is the law saying that? Are there different "categories" within exempt assets (e.g., TBE land or homestead is one category of exempt property which can be gifted without any fraudulent transfer, and my salary in the bank for the first 6 months is another category of exempt property which cannot be gifted without fraudulent transfer?) NO (because there is no such categories). Then how/why your arguments stand? if your argument is correct then the homestead or TBE land also should not be gifted to my friends.

If I buy "another exempt asset" such as homestead on my name only using my salary within six months after it is deposited then is it OK to later transfer that "another exempt asset" to my friends, at any time, without worrying about fraudulent transfer? If the answer is YES then what is the problem in directly transferring my salary to my friends (instead of buying "another exempt asset" then transfer it to my friends) within 6 months? Are you saying that the answer is NO? If you say NO then you are saying that a person cannot transfer his/her homestead to others without fraudulent transfer and this violates existing case law.

Finally, exempt asset is something that is NOT within the reach of a creditor, and the creditor has no right to complain about how or what the debtor will do with that exempt property. Whether that exempt asset (purchased using my salary in the bank in the first 6 months) is on the name of the debtor or on the name of someone else does not matter (in either case the creditor cannot get it and should not complaint about). The creditor can only complain if an exempt asset is purchased using non-exempt assets of the debtor and, in that case, such purchase is fraudulent transfer or fraudulent conversion [section 222.30 http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0200-0299/0222/Sections/0222.30.html ] whether that purchased property is on the debtor's name or someone else's name.

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[Ohiogal]

Thanks.
chapter 726 at http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0726/0726.html states that exempt assets cannot come under fraudulent transfer:
726.102 (2) “Asset” [which can be claimed by a creditor under fraudulent transfer] means property of a debtor, but the term does not include:
(b) Property to the extent it is generally exempt under nonbankruptcy law; or

If I have a tenancy by entirety (TBE) land with my spouse or a homestead on my name alone (and we purchased it years before the lawsuit filed) then the land/homestead is exempt from creditors (there are many case laws). I (and my spouse) can do whatever we want with that land/homestead (at any time), including directly gifting it to my friends without the fear of fraudulent transfers (there are many case laws on this also). This is because of the fact that the TBE land or homestead is exempt from creditors. Similarly, the salary in my bank account is exempt for 6 months and I can do whatever with that, including gifting to my friends by directly wire transferring it my friends’ account within 6 months.

However, you are saying that my salary, which is exempt asset for the first 6 months once it is deposited, can be replaced by another exempt asset on my name only (but cannot be gifted). How? Why? Is the law saying that? Are there different "categories" within exempt assets (e.g., TBE land or homestead is one category of exempt property which can be gifted without any fraudulent transfer, and my salary in the bank for the first 6 months is another category of exempt property which cannot be gifted without fraudulent transfer?) NO (because there is no such categories). Then how/why your arguments stand? if your argument is correct then the homestead or TBE land also should not be gifted to my friends.

If I buy "another exempt asset" such as homestead on my name only using my salary within six months after it is deposited then is it OK to later transfer that "another exempt asset" to my friends, at any time, without worrying about fraudulent transfer? If the answer is YES then what is the problem in directly transferring my salary to my friends (instead of buying "another exempt asset" then transfer it to my friends) within 6 months? Are you saying that the answer is NO? If you say NO then you are saying that a person cannot transfer his/her homestead to others without fraudulent transfer and this violates existing case law.

Finally, exempt asset is something that is NOT within the reach of a creditor, and the creditor has no right to complain about how or what the debtor will do with that exempt property. Whether that exempt asset (purchased using my salary in the bank in the first 6 months) is on the name of the debtor or on the name of someone else does not matter (in either case the creditor cannot get it and should not complaint about). The creditor can only complain if an exempt asset is purchased using non-exempt assets of the debtor and, in that case, such purchase is fraudulent transfer or fraudulent conversion [section 222.30 http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0200-0299/0222/Sections/0222.30.html ] whether that purchased property is on the debtor's name or someone else's name.

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Hire an attorney. SERIOUSLY!

 

[commentator]

Strong hint here. If the responders on this board do not like your arguments, do not perceive you overall in a positive manner based on your presentation of these arguments and say that your presentation lacks merit, it is a preview of how the judge and court system will be likely to perceive your case. Get a lawyer. Allow this attorney to do what they believe is best, say what is best, argue what they believe is best in your case. Else you're going to hang yourself.

 

[adjusterjack]

You can quote statutes till the cows come home but you aren't changing this non-lawyer's opinion.

 

[stealth2]

I must wonder - why are you so intent on not paying your debt?

 

[quincy]

I must wonder - why are you so intent on not paying your debt?

It may just be me but ... it seems like “gifting” a large portion of one’s salary to a creditor to reduce one’s debt is a better, more ethical way to operate than gifting this same money to family and friends in order to avoid paying the creditor what is owed.

 

[Just Blue]

It may just be me but ... it seems like “gifting” a large portion of one’s salary to a creditor to reduce one’s debt is a better, more ethical way to operate than gifting this same money to family and friends in order to avoid paying the creditor what is owed.

Yeah...no. Not just you.

 

[stealth2]

It may just be me but ... it seems like “gifting” a large portion of one’s salary to a creditor to reduce one’s debt is a better, more ethical way to operate than gifting this same money to family and friends in order to avoid paying the creditor what is owed.

The heat is getting to me. Took me a few to get what you were saying...