Is it fraudulent transfer?

[denkal]

What is the name of your state? Florida

I am the sole breadwinner in my home since 2010. I have tenants by entirety – TB bank account jointly with my wife since 2010 and my salary from my only job was directly deposited into that TB account. I lost a case in 2015 which was filed against me in 2014 and I became a judgment debtor since 2015. Due to TB nature of my bank account, the judgment creditor could not get any money from that TB account.

In 2020, I lost several signed checkbooks of that TB account and had some other issues. Therefore I closed that TB account (at that time, there were almost no funds in that TB account) and opened a single account on my name only, and my salary was directly deposited into that single account for around 3 months (my wife was sick at that time therefore I could not open a TB account). After 3 months, I closed that single account (by that time there was no funds in that single account also) and opened a new TB account (with the same bank where I earlier closed my TB account) with my wife, and my salary is directly deposited into that new TB account since then.

My friend alerted me about possible fraudulent transfers http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0726/0726.html and advised me if the direct deposits of my salary from single account to new TB account may come under that fraudulent transfer category if the creditor ever notice this. Does it come under fraudulent transfer?

 

[FlyingRon]

You should not take advice on serious matters from non-attorneys. Wages deposited into a TBE account is not a fraudulent transfer. If the creditor wants to attach your wages, they'll have to do so by garnishment. I'm not seeing how a transfer from one account to another that you own (regardless of the tenancy) is a "transfer" under that statute. The fraudulent transfer means you gave the money to someone else (like you asked your best friend to hold some money for you so that the creditor wouldn't find it).

 

[denkal]

unfortunately the definition of transfer is very wide as defined there: “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.

 

[Ohiogal]

I think you posted this question before. Or maybe this is the other side.
https://forum.freeadvice.com/threads/debtor-changed-joint-bank-account.661188/

 

[LdiJ]

unfortunately the definition of transfer is very wide as defined there: “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.

Transferring it from one bank account to another is not disposing or parting with it.

 

[denkal]

726.105(1)(a) : With actual intent to hinder, delay, or defraud any creditor of the debtor. Can creditor successfully win a claim that it is done to hinder or delay or defraud, as the creditor can grab from my single account not from TB.

I read the thread before I post the current one https://forum.freeadvice.com/threads/debtor-changed-joint-bank-account.661188/ and it is helpful. But in my case, there is proof still exists that I moved from my long time TB, to single for a short while, then to TB; all these happened several years after the judgment which made me a debtor. Also my creditor is actively pursuing collection of judgment but "gave" a break since 2020 may be due to Covid.

 

[Zigner]

unfortunately the definition of transfer is very wide as defined there: “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.

You did not dispose of or part with an asset.

 

[denkal]

I am concerned of two things:

First one:
this is at http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0726/0726.html
726.105(1)(a) : With actual intent to hinder, delay, or defraud any creditor of the debtor.
and
(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.

2nd one:
There is another law 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.

 

[Zigner]

You should speak to an attorney, as an internet message forum is not going to be able to give you specific advice of this nature. Good luck.

 

[denkal]

If this forum, which many informed me that a great one, could provide feedback on how a court view depositing into my temporary single account then coming back to TB account in the view of the following law, it really helps me assess my situation.

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.

 

[PayrollHRGuy]

If this forum, which many informed me that a great one, could provide feedback...

It has several times.

 

[Zigner]

If this forum, which many informed me that a great one, could provide feedback on how a court view depositing into my temporary single account then coming back to TB account in the view of the following law, it really helps me assess my situation.

It can't because when it does, you keep asking. Besides, why would you rely on ignorant strangers on the internet who don't have the facts of your matter instead of an in-person review by a professional?

 

[Taxing Matters]

You did not dispose of or part with an asset.

Actually, he did. He transferred wages, which were his sole asset, to a bank account held as tenancy by the entirety (TBE). Assets held TBE are not the asset of either the husband or the wife but are an asset of the marital unit. As such, assets held TBE cannot be reached by creditors of just one spouse. Such transfers may be subject to a claim of a creditor under Florida's fraudulent conveyance statutes. Such was the case where the IRS sought to reverse a transfer of real estate held by the taxpayer solely in his name and after the federal tax lien arose he transferred the property to himself and his wife as TBE. The federal district court held as follows:

Here, the undisputed facts and record evidence demonstrate that the transfer of the Sarasota Property to the Defendants, as tenants by the entirety, occurred on May 11, 2009. (Doc. No. 35-1, at ¶ 19). At that time, Major possessed assets with a maximum value of $228,224.77, and owed liabilities to the IRS in a minimum amount of $218,260.62. (Doc. No. 35, at 16-17). As a result, the transfer of the Sarasota Property, which had a just appraised value of $112,000.00, decreased the maximum value of Major's assets to $116,224.77 “by eliminating all of the equity that had been in [Major's] name alone.” See In re DelCorso, 382 B.R. 240, 259 (Bankr.E.D.Pa.2007) (holding that the recording of a deed purporting to transfer the debtor's home to her and her husband as tenants by the entirety was a constructively fraudulent transfer because the debtor “received nothing for it, it was to an insider, and because it rendered her insolvent by eliminating all of the equity that had been in [her] name alone.”). As a result, Major became insolvent as a result of the transfer of the Sarasota Property, as the amount of his liabilities exceeded the value of his assets by approximately $102,035.85. In addition to rendering him insolvent, the undisputed facts and record evidence demonstrate that Major did not receive reasonably equivalent value in exchange for the transfer of the Sarasota Property, as Major's wife did not provide any consideration for the transfer and so called “marital consideration” is not sufficient to create a genuine issue of fact under Section 726.106(1). See In re Treadwell, 699 F.2d at 1051. Thus, the transfer of the Sarasota Property to Major and his wife, as tenants by the entirety, is avoidable as a matter of law.​

​

United States v. Major, 551 B.R. 531, 541–42 (M.D. Fla. 2016). Now, whether the OP's transfers of wages to a TBE account are potentially subject to being reversed as fraudulent transfers requires knowing some additional information. For example, it matters the extent to which the wages were exempt from attachment in the first place under federal and Florida law. Exempt assets deposited into the TBE account would not be a fraudulent conveyance. Also, Florida's fraudulent conveyance statutes are a bit complex and are broken down broadly into two significant categories: transfers that occur when the debtor is insolvent (such as the case I cited above) and transfers that are done with an intent to hinder, delay, or defraud a creditor. The former circumstance is easier for a creditor to prove a fraudulent conveyance.

If the creditor seeks to set aside wage deposits into the TBE account as a fraudulent conveyance the OP ought to see a Florida attorney familiar with the fraudulent conveyance statutes for help.