Debtor changed joint bank account

[javan78]

What is the name of your state? Florida
I won a case but could not start collecting any judgment amount for several years due to my personal issues. Now, when I collected the financial details of the debtor, it is confirmed that he has only one bank account, which is tenants by entirety (TBE) in which his salary from his employer is directly deposited. That bank account (2nd account) was created (with bank Y), jointly with his wife, almost an year after I filed the lawsuit which I won.



The debtor and his wife testified under oath that their earlier bank account (1st account, with Bank X), which was there prior to the lawsuit was filed and existed until few days prior to the current i.e., 2nd account (with bank Y) was opened, is also of TBE type but he closed that 1st account due to some personal issue/inconvenience with bank X. He further testified that during those years/days, his salary had been directly deposited into that 1st account.



Thereby he is saying that, he simply changed the bank (from X to Y) but the nature/type of accounts (1st account and 2nd account) are of TBE type only. That is, his salary is/was always getting deposited into a TBE account only. Thereby he is indicating that he did not do any fraudulent transfer (CHAPTER 726) (i.e., did not change the bank account type, for fraudulent purposes) by moving to the TBE (current) 2nd account with bank Y. In summary what he is saying is: even if he continued his 1st account with bank X (rather than closing it and moving to 2nd account with bank Y) then also it would be of TBE type only (as is the current situation with his 2nd account with bank Y).



I have no proof to show that his 1st account with bank X is not of TBE type as that account information is no longer available with bank X (because it was several years old since it was closed by the debtor therefore the bank informed me that they permanently deleted those files). When I contacted his employer (his employer is the same all these years), the records show that his salary was getting deposited into a joint account (1st account) in bank X in those days/years but there is no way to prove it was TBE or not although it was a joint account with his wife.



I know that TBE accounts cannot be garnished by a creditor who has judgment against only one of the account holders (in this case, my debtor alone). Please provide your feedback on what are my options in collecting from his current account (i.e., 2nd account with bank Y). Did he commit any fraudulent transfer? What are my options? He has no other assets or income.

 

[LdiJ]

What is the name of your state? Florida
I won a case but could not start collecting any judgment amount for several years due to my personal issues. Now, when I collected the financial details of the debtor, it is confirmed that he has only one bank account, which is tenants by entirety (TBE) in which his salary from his employer is directly deposited. That bank account (2nd account) was created (with bank Y), jointly with his wife, almost an year after I filed the lawsuit which I won.



The debtor and his wife testified under oath that their earlier bank account (1st account, with Bank X), which was there prior to the lawsuit was filed and existed until few days prior to the current i.e., 2nd account (with bank Y) was opened, is also of TBE type but he closed that 1st account due to some personal issue/inconvenience with bank X. He further testified that during those years/days, his salary had been directly deposited into that 1st account.



Thereby he is saying that, he simply changed the bank (from X to Y) but the nature/type of accounts (1st account and 2nd account) are of TBE type only. That is, his salary is/was always getting deposited into a TBE account only. Thereby he is indicating that he did not do any fraudulent transfer (CHAPTER 726) (i.e., did not change the bank account type, for fraudulent purposes) by moving to the TBE (current) 2nd account with bank Y. In summary what he is saying is: even if he continued his 1st account with bank X (rather than closing it and moving to 2nd account with bank Y) then also it would be of TBE type only (as is the current situation with his 2nd account with bank Y).



I have no proof to show that his 1st account with bank X is not of TBE type as that account information is no longer available with bank X (because it was several years old since it was closed by the debtor therefore the bank informed me that they permanently deleted those files). When I contacted his employer (his employer is the same all these years), the records show that his salary was getting deposited into a joint account (1st account) in bank X in those days/years but there is no way to prove it was TBE or not although it was a joint account with his wife.



I know that TBE accounts cannot be garnished by a creditor who has judgment against only one of the account holders (in this case, my debtor alone). Please provide your feedback on what are my options in collecting from his current account (i.e., 2nd account with bank Y). Did he commit any fraudulent transfer? What are my options? He has no other assets or income.

I would think that any joint bank account would be a TBE account. Both parties would have full access and control over any monies in the account, so by nature, it is a TBE account.

 

[doucar]

Why don't you garnish his paycheck directly from the employer and avoid the TBE account?

 

[adjusterjack]

There was nothing illegal or fraudulent about what he did. In fact, he could have closed out all his bank accounts, got paper paychecks and cashed them at check cashing places.

You may also find yourself stymied when you file for wage garnishment if he claims the head of the family exemption from wage garnishment.

See Florida statute 77.041:

http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0000-0099/0077/Sections/0077.041.html

 

[quincy]

javan78, one of the best ways to collect on a judgment is to start collection actions immediately after the court awards the judgment. You say you waited “several years” to start your attempts to collect? How many years?

It can be difficult to show that assets of the debtor were transferred after the judgment solely in an attempt to avoid collection (a fraudulent conveyance) after the passage of years.

 

[javan78]

Thanks a lot!

Based on my knowledge,

LdiJ: not all accounts are TBE, e.g., tenants in common and joint tenants with right of survivorship.

If the wife and husband explicitly chose any of these other options (other than TBE), although TBE option is explicitly available to them when opening the bank account, then the joint account is no longer TBE. If that was the case, I can garnish the share of the debtor from that joint (non-TBE) account.



Doucar: He was and is the head of the family (his wife or others) have no income. He never agreed/signed permitting me to garnish his salary. Therefore I cannot garnish his salary.



Quincy: I do agree but if I can prove that his 1st account was not TBE then I can garnish half of his money (which is more than 6 months old) that is there in his current (2nd) account.



My question, said in other way, is:

if the debtor and his wife testify under oath that their 1st account was TBE (that is what they did), and I have nothing to prove that it was not TBE, then will it be enough to prove that his 1st account was TBE (thereby he did nothing wrong by creating the current TBE account, i.e., 2nd account)?

In summary, who has to prove (I or debtor or someone else) that his 1st account was not TBE? If so, how?

 

[quincy]

Thanks a lot!

Based on my knowledge,

LdiJ: not all accounts are TBE, e.g., tenants in common and joint tenants with right of survivorship.

If the wife and husband explicitly chose any of these other options (other than TBE), although TBE option is explicitly available to them when opening the bank account, then the joint account is no longer TBE. If that was the case, I can garnish the share of the debtor from that joint (non-TBE) account.



Doucar: He was and is the head of the family (his wife or others) have no income. He never agreed/signed permitting me to garnish his salary. Therefore I cannot garnish his salary.



Quincy: I do agree but if I can prove that his 1st account was not TBE then I can garnish half of his money (which is more than 6 months old) that is there in his current (2nd) account.



My question, said in other way, is:

if the debtor and his wife testify under oath that their 1st account was TBE (that is what they did), and I have nothing to prove that it was not TBE, then will it be enough to prove that his 1st account was TBE (thereby he did nothing wrong by creating the current TBE account, i.e., 2nd account)?

In summary, who has to prove (I or debtor or someone else) that his 1st account was not TBE? If so, how?

How much money was awarded (what is the value of the judgment)?

If it is a sizable amount of money owed, it could be best if you turn the collection over to professionals at this point. Even though you will only collect a percentage of the amount recovered that way, at least you have a better chance of collecting something.

Proof is on you.

 

[adjusterjack]

In summary, who has to prove (I or debtor or someone else) that his 1st account was not TBE? If so, how?

I think you are peeing in the ocean to make the tide come in. The burden of proving that there was a fraudulent conveyance is on you. You have to present incontrovertible evidence that changes in bank accounts were made for the sole purpose of preventing your access to the money. I emphasize sole purpose because you have to prove intent to defraud, not just that it happened. It's easy to prove that it happened, not so easy to prove intent.

If you can prove that he lied under oath about the status of the account at any point in his testimony you might be able to get him penalized for perjury. But that's not going to help you get any money and after several years I don't think any judge will be interested.

 

[Taxing Matters]

I know that TBE accounts cannot be garnished by a creditor who has judgment against only one of the account holders (in this case, my debtor alone). Please provide your feedback on what are my options in collecting from his current account (i.e., 2nd account with bank Y). Did he commit any fraudulent transfer? What are my options? He has no other assets or income.

In general in the banking business in states with tenancy by the entirety (TBE) property systems for married persons a joint bank account established by a married couple is set up by the bank as a TBE account, though that can vary by bank. In many TBE states the law also provides a presumption that joint property held by married persons is TBE even if it is not expressly titled that way, but Florida appears to be an exception to that. So by banking practice the first account was likely TBE, but not guaranteed. Unfortunately, you apparently now have no way to prove that it was not a TBE account since you waited so long and in any action to set aside a fraudulent conveyance you would bear the burden of proof. So I don't see that you'd gain anything pursuing that kind of action at this point.

Garnishment of wages is an option to collect, though it may be that the Florida head of household exemption would leave you collecting nothing from that.

If the judgment is large enough you might consider consulting an attorney for assistance in pursuing collection of what you are owed.

It may be, though, that at least for now there may just not be any nonexempt assets you can attach to get paid. In that case, the debtor is currently "judgment proof".

 

[quincy]

All avenues can be worth exploring but selling the debt to a debt collection agency could be the fastest and best way to get money from the judgment. Whether any agency would be interested in purchasing the judgment outright will depend on the size of the judgment.

 

[Taxing Matters]

I think you are peeing in the ocean to make the tide come in. The burden of proving that there was a fraudulent conveyance is on you. You have to present incontrovertible evidence that changes in bank accounts were made for the sole purpose of preventing your access to the money. I emphasize sole purpose because you have to prove intent to defraud, not just that it happened. It's easy to prove that it happened, not so easy to prove intent.

No, that is not an accurate statement of the law. First, the standard is not "incontrovertible evidence". The burden of proof here is preponderance of the evidence. Second, it is not always necessary to prove the debtor intended to avoid his creditors by the transfer in order to make a fraudulent conveyance case, let alone that that intent was the sole reason for the transfer. Where intent is needed, a presumption of intent can be raised by showing that one of the badges of fraud listed in Florida Statute section 725.105(2) were present, which then shifts the burden to the debtor to disprove the intent. As a Florida appeals court explains:

A prejudgment attachment is available against assets fraudulently transferred from a debtor and held in the name of another. Cerna v. Swiss Bank Corp. (Overseas), 503 So.2d 1297 (Fla. 3d DCA 1987).2 “Upon motion by plaintiff, a writ of attachment may issue when the grounds relied on for the issuance of the writ clearly appear from specific facts shown by a verified complaint or a separate affidavit of the plaintiff ...,” and all applicable requirements of the attachment statute are met. § 76.08, Fla. Stat. (2013). In an action for relief against an allegedly fraudulent transfer sought pursuant to Chapter 726, Florida Statutes, a creditor may seek an attachment against the transferred asset. § 726.108(1)(b), Fla. Stat. (2013). Because the determination of actual fraudulent intent can be difficult, courts look to certain “badges of fraud” to determine whether the transfer was made with the intent to defraud creditors. Beal Bank SSB v. Almand & Assocs., 780 So.2d 45, 60 (Fla.2001). Those “badges of fraud” are set forth in section 726.105, Florida Statutes (2013).3 “The existence of badges of fraud creates a prima facie case and raise a rebuttable presumption that the transaction is void.” Stephens v. Kies Oil Co., Inc., 386 So.2d 1289, 1290 (Fla. 3d DCA 1980). Consideration may also be given to factors other than those listed. See In re Miller, 188 B.R. 302, 305–06 (Bankr.M.D.Fla.1995). Courts may take into account the circumstances surrounding the conveyance. Kirk v. Edinger, 380 So.2d 1336, 1337 (Fla. 5th DCA 1980). After receipt of this evidence, the burden shifts to the debtor or transferor to show the transfer was made without intent to “delay, hinder or defraud creditors.” See Mejia v. Ruiz, 985 So.2d 1109, 1114 (Fla. 3d DCA 2008). The very function of a writ of attachment is to serve as a lien upon property that may be the subject of execution upon a later-obtained judgment. See Tilghman v. U.S. Fid. & Guar. Co., 90 Fla. 282, 105 So. 823 (1925). See also Cerna, 503 So.2d 1297, 1298 (Fla. 3d DCA 1987).​

​

At the hearing on GE's motion for garnishment or attachment, GE presented competent, substantial evidence to support issuance of the writ. GE was not required at that time to prove by a preponderance of the evidence that the loan forgiveness was, actually, a fraudulent transfer.4 GE merely had to raise a rebuttable presumption of fraudulent intent by asserting the existence of certain badges of fraud, thereby creating a prima facie case for fraudulent transfer to be determined later in the litigation between the parties.​

Gen. Elec. Co. v. Chuly Int'l, LLC, 118 So. 3d 325, 327–28 (Fla. Dist. Ct. App. 2013). The problem for the OP here in challenging the transfer from Bank A to Bank B is not proving intent. He or she doesn't even get that far because he or she must first show that a transfer of an asset of the debtor was made without adequate consideration. But if the account in Bank A was a TBE account then it was not an account of the debtor and thus a transfer to a TBE account in Bank B would not be a fraudulent conveyance.

 

[quincy]

I hope javan78 returns to say how old the judgment is and how much he was awarded ...

 

[javan78]

Thanks to everyone for the inputs!!



Quincy: it was several tens of thousands. The case took around 2 years to decide (to get judgment after filing) and the judgment was announced 5 years ago. Bank X (1st bank) said they keep documents just for 5 years therefore no documents are available about Bank X (1st account) when I started enquiring about them recently.



Taxing Matters and others: In case there is some confusion due to earlier details or lack of my details, let me clarify: debtor did Not say (or have produced any proof of) transferring any money from his 1st account (in bank X) to his 2nd account (in bank Y).



He created a TBE account (2nd account) with bank Y around 6 years ago, soon after closing the 1st account with bank X. He said that he spent all the money (for normal living purpose) that was there in the 1st account (bank X) before it was closed, so there is no issue about what happened (or where it was transferred transfer) with the money in that 1st account in bank X. He and his wife testified that the 1st account with bank X was also TBE.



After he opened 2nd account (with bank Y) (which is clearly a TBE), all his salary is getting accumulated in that account (and some money was spent, from time to time, from that account for his family’s regular expenses) and now there are enough funds in that 2nd account to fully satisfy the judgment but he is not doing.



Therefore the core issue here is whether he committed any fraudulent transfer by making his salary by getting deposited his salary into bank Y (i.e., 2nd account, which clearly shows is a TBE) than into bank X (i.e., 1st account, which he claimed was a TBE but I have no evidence to disprove it). (if so, part/full of the money in his 2nd account in bank Y can be used to satisfy the judgment).



As per Florida fraudulent transfer 726, even creating a new account (and make his salary deposited into that new account) for the purpose of delay, hinder, or defraud a creditor is also fraudulent transfer. “Transfer means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and includes payment of money, release, lease, and creation of a lien or other encumbrance.”



Debtor’s argument is that his 1st account with Bank X was also TBE therefore he did not commit ANY fraudulent transfer by getting his salary deposited into 2nd account with bank Y (because the 2nd is also a TBE just like his 1st account was, but just with a new bank which is more convenient to him).

 

[quincy]

Thanks to everyone for the inputs!!



Quincy: it was several tens of thousands. The case took around 2 years to decide (to get judgment after filing) and the judgment was announced 5 years ago. Bank X (1st bank) said they keep documents just for 5 years therefore no documents are available about Bank X (1st account) when I started enquiring about them recently.



Taxing Matters and others: In case there is some confusion due to earlier details or lack of my details, let me clarify: debtor did Not say (or have produced any proof of) transferring any money from his 1st account (in bank X) to his 2nd account (in bank Y).



He created a TBE account (2nd account) with bank Y around 6 years ago, soon after closing the 1st account with bank X. He said that he spent all the money (for normal living purpose) that was there in the 1st account (bank X) before it was closed, so there is no issue about what happened (or where it was transferred transfer) with the money in that 1st account in bank X. He and his wife testified that the 1st account with bank X was also TBE.



After he opened 2nd account (with bank Y) (which is clearly a TBE), all his salary is getting accumulated in that account (and some money was spent, from time to time, from that account for his family’s regular expenses) and now there are enough funds in that 2nd account to fully satisfy the judgment but he is not doing.



Therefore the core issue here is whether he committed any fraudulent transfer by making his salary by getting deposited his salary into bank Y (i.e., 2nd account, which clearly shows is a TBE) than into bank X (i.e., 1st account, which he claimed was a TBE but I have no evidence to disprove it). (if so, part/full of the money in his 2nd account in bank Y can be used to satisfy the judgment).



As per Florida fraudulent transfer 726, even creating a new account (and make his salary deposited into that new account) for the purpose of delay, hinder, or defraud a creditor is also fraudulent transfer. “Transfer means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and includes payment of money, release, lease, and creation of a lien or other encumbrance.”



Debtor’s argument is that his 1st account with Bank X was also TBE therefore he did not commit ANY fraudulent transfer by getting his salary deposited into 2nd account with bank Y (because the 2nd is also a TBE just like his 1st account was, but just with a new bank which is more convenient to him).

Thank you for answering all of our questions, javan78.

I think you will be hard pressed to show there was a fraudulent transfer of funds. You might be best off concentrating on a garnishment of wages and asset attachment.

If you are struggling with this, you could seek out assistance from an attorney in your area or, as I mentioned before, get a professional debt collector involved.

 

[javan78]

Thank you Quincy.