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  1. #1
    Join Date
    May 2016
    Posts
    10

    Default Transferring or Spending Money Before it is Claimed by a Judgment Creditor

    My question involves court procedures for the state of: Pennsylvania

    I live with my husband in Pennsylvania. My husband has no regular income but I have a small job. Both our earnings are deposited into a common account (CA) which is on both of our names. I have an investment account (IA) on my name. My former colleague is suing me since January 2013.

    Since this lawsuit was filed (until last month), I moved 23000 dollars, at various times, from CA into IA. In 2014, I moved back 10000 from IA to CA, and my husband bought a car on his name, using this 10000.

    Last month, based on my friend’s advice, I opened a TBE account with my husband and we were depositing our earnings into that account alone, since then.
    Last month, my husband wanted to start a small business and he opened his personal account. I moved 13000, which was remaining in my IA, into his newly opened personal account.

    Now the CA and IA are almost empty (they have less than 100 dollars each). We have no other accounts except these 4 accounts (CA, IA, TBE, and newly opened personal account of my husband). We have no other properties also, jointly or individually.

    I read fraudulent transfer in your forum and I am concerned. We do not want to be in that legal trouble. If I lost the lawsuit, how much money will legally goes to my former colleague (creditor), from this 13000, if he is awarded over 13000? We want to set aside that amount and my husband will start his business, if he can, with the remaining amount. Is my husband’s car safe from the creditor?

    Any information is helpful.

  2. #2
    Join Date
    Nov 2013
    Posts
    7,056

    Default Re: How Much the Creditor Get

    Fraudulent transfer of assets is not a crime. A fraudulent transfer is when someone transfers assets to avoid a creditor from seizing those assets. If the creditor can prove in court, after a judgment is rendered, that a fraudulent transfer took place, they can get those transfers reversed and seize the assets. The use of your and your husbands assets in the normal living, buying a car, starting a business is not fraudulent.

    When and if a judgment against you is rendered you can deal with how you will pay. For now, just live.

  3. #3
    Join Date
    May 2016
    Posts
    10

    Default Re: How Much the Creditor Get

    I appreciate your information. If and when the creditor comes for collection, how these money transfers between wife and husband are divided by the Court to decide which part belongs to me and which part belongs to my husband and which part is fraudulent? I borrowed /moved/withdrew 23000 dollars from common account (in common account, we both have equal share) to my personal account. But I gave back 10000 in 2014 (and my husband used it for car). We have been doing these transfers prior to this lawsuit was filed.

    Now I finally moved the remaining 13000 to my husband’s personal account and ceased such transfers. In the worst case, my husband may not be able to start the business he planned (in that case, the money sits in his account, and which the creditor may claim that I transferred to my husband just to hide it).

  4. #4
    Join Date
    Nov 2013
    Posts
    7,056

    Default Re: How Much the Creditor Get

    If you lose the suit, at that point, the court doesn't concern itself with where the money is going to come from to pay off the judgment. The court may get involved again if you choose not to pay the judgment or make reasonable arrangement with the plaintiff to pay it off. And the plaintiff doesn't care it you pay, your husband pays, or Santa pays.

    It is only if you do not pay that the plaintiff will look at where your assets are and if you tried to hide the money so they can't get their hands on it. Say you transfer your assets to your mother for no apparent reason. That could be considered fraudulent. But if you need a car and buy one, that is not. Starting a legitimate business is not fraudulent. Paying your mortgage or utilities is not fraudulent.

    A creditor has many avenues to collect a judgment. It's not just assets in a bank or investment account that are accessible. In most states there are certain assets that are exempt from seizure. Property (the car for example) can also be seized and sold.

    So if your moving assets around was not for fraudulent purposes, stop worrying about it.

    You can read the PA code on the enforcement of money judgments here.

  5. #5
    Join Date
    May 2016
    Posts
    10

    Default Re: How Much the Creditor Get

    I once again appreciate all your information including the link on garnishments in PA.

    If I lose the case, the judgment amount will be several times more than 13000, which, obviously, I will not be afforded to pay in my life time (I am in my 60s and my husband is in his 70s). The wages from my job is barely enough to run the family. Except the car (on my husband’s name) and my small job, and the cash and accounts in question, we have no other property (including house, bank accounts, cash, gold, vehicles, etc). My concern is regarding the money transactions that took place between January 2013 (the date I received the lawsuit) until last month (the date on which I moved 13000 to my husband’s account).

    There were 7000 dollars in my IA account and 2000 in CA account during the date on which I received the lawsuit in January 2013. After that, as I explained earlier, we moved the money between the accounts. These money movements were stopped after we created the TBA account last month. We have been moving/transferring part of our money (between the IA and CA accounts) even before the lawsuit was filed.

    If the creditor comes for collection,

    (1). On what basis the Judge decides my share and my husband’s share in that 13000 amount or in the car. Or whether that 13000 will be divided into two halves and the car (price of the car) will also be divided into two halves, and then my portion will be paid to the creditor?

    (2). What date will be taken as the starting/reference date for consideration for deciding the shares (the date on which the I received the lawsuit or any prior or past date)?

    (3). My husband is saying that, if I want, he will transfer part (or full) of that 13000 money to my personal account so that we can use it for covering part of our living expenses in the meantime. He is saying that such transfer will be helpful to undo the fraudulent transfer (if any that is existing).

    Please provide your advice.

  6. #6
    Join Date
    Oct 2006
    Posts
    16,474

    Default Re: How Much the Creditor Get

    Quote Quoting kewin
    View Post
    I once again appreciate all your information including the link on garnishments in PA.

    If I lose the case, the judgment amount will be several times more than 13000, which, obviously, I will not be afforded to pay in my life time (I am in my 60s and my husband is in his 70s). The wages from my job is barely enough to run the family. Except the car (on my husband’s name) and my small job, and the cash and accounts in question, we have no other property (including house, bank accounts, cash, gold, vehicles, etc). My concern is regarding the money transactions that took place between January 2013 (the date I received the lawsuit) until last month (the date on which I moved 13000 to my husband’s account).

    There were 7000 dollars in my IA account and 2000 in CA account during the date on which I received the lawsuit in January 2013. After that, as I explained earlier, we moved the money between the accounts. These money movements were stopped after we created the TBA account last month. We have been moving/transferring part of our money (between the IA and CA accounts) even before the lawsuit was filed.

    If the creditor comes for collection,

    (1). On what basis the Judge decides my share and my husband’s share in that 13000 amount or in the car. Or whether that 13000 will be divided into two halves and the car (price of the car) will also be divided into two halves, and then my portion will be paid to the creditor?

    (2). What date will be taken as the starting/reference date for consideration for deciding the shares (the date on which the I received the lawsuit or any prior or past date)?

    (3). My husband is saying that, if I want, he will transfer part (or full) of that 13000 money to my personal account so that we can use it for covering part of our living expenses in the meantime. He is saying that such transfer will be helpful to undo the fraudulent transfer (if any that is existing).

    Please provide your advice.
    I do not think that you fraudulently transferred anything. You have used the money for normal things/life. That is not fraudulent transfer.

  7. #7
    Join Date
    May 2016
    Posts
    10

    Default Re: How Much the Creditor Get

    I once again appreciate your response.

    I would like to stress the fact that the CA and IA were never almost empty before (until last month).

    So, we will keep the money 13000 in my husband's account alone until the case is over (if he starts a new business in the meantime with that money, he will do).

    Once again I appreciate.

  8. #8
    Join Date
    May 2016
    Posts
    8

    Default Re: How Much the Creditor Get

    Based on the response I received from the current forum for my question, http://www.expertlaw.com/forums/show...524#post952524 , I think it is best if your husband pays back your $13000 to undo the fraudulent transfer if any. You are then free to spend it for your living expenses in the meantime.

    You almost emptied your CA and CA (equal to closing those accounts) prior to these transfers and it may raise suspicion on your intention during fraudulent transfer claim, if initiated.

    I am not an expert but this is my 1% contribution.

  9. #9
    Join Date
    Nov 2013
    Posts
    7,056

    Default Re: How Much the Creditor Get

    Let's try this one more time for those with cotton stuffed in their ears.

    Fraudulent conveyance or fraudulent transfer is a civil cause of action to reverse the conveyance so the creditor can recover the assets to satisfy a judgment if the debtor does not pay. If a debtor pays, it's a moot point even if there was in fact a FC. If the debtor's actions were to convey assets to a third party so the creditor can't recover the assets, that and only that is a fraudulent conveyance. The likely worst outcome of a claim of fraudulent transfer is that it will be reversed.

    Section 357 is entitled "Conveyance made with intent to defraud" and states: "Every conveyance made and every obligation incurred with actual intent, as distinguished from intent presumed in law, to hinder, delay, or defraud either present or future creditors, is fraudulent as to both present and future creditors." 39 P.S. Section 357. In addressing this Section, the Pennsylvania Superior Court stated:

    This section of the Act does not require that the debtor make himself insolvent or execution proof, only that the debtor convey with intent to hinder, delay or defraud creditors. "Since fraud is usually denied, it must be inferred from all facts and circumstances surrounding the conveyance, including subsequent conduct." Godina v. Oswald, 206 Pa.Super. 51, 55, 211 A.2d 91 (1965).
    Is that clear now?

  10. #10
    Join Date
    May 2016
    Posts
    8

    Default Re: How Much the Creditor Get

    I have three remaining questions still:

    (A). Basically, in either case, i.e., if either OP keeps that money (or part of that) with her husband OR get that money (or part of that) back to her personal account which she may create and spend it completely for living expenses, the end result would be the same (if this issue ever goes for fraudulent transfer claim) as long as OP and her husband can convince the Court that all these transactions are part of normal transactions between husband and wife. Is it correct?

    (B). If the creditor comes for collection AND OP has some money (which she received from her husband or from someone else) in her personal account but she did not spend it for living expenses then the creditor will get that money quickly from her personal account. Is this correct?

    (C). However, for any money remaining with OP's husband, the creditor has to fight in the court to prove that that money (or part of that) is the result of fraudulent transfer (from OP to her husband). Is it correct?

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