My question involves bankruptcy in the state of: California
A family member is planning to file for bankruptcy in California. After discussing it with her, I've become concerned about a particular issue.
She transferred ownership of a home to her adult son a little over a year and a half ago. I'm concerned that this transfer will be deemed fraudulent if she files for bankruptcy.
She lives in a home that is mortgaged. She is current on the mortgage, but can no longer afford to pay her credit card bills. (She's opted to pay the mortgage at the expense of the cc bills.) Slightly over a year a half ago, she transferred ownership of a home that she owns outright to her son. She stopped paying her credit card bills (at the advice of a lawyer) earlier this year.
I'm concerned the transfer will be deemed fraudulent as per Section 548 of the Bankruptcy Code:
http://www.law.cornell.edu/uscode/ht...8----000-.html
As far as I can tell, none of the four subsections under Section 548(a)(1)(B)(ii) are applicable to the situation:
(I) She was solvent at the time of the transfer, and keeping the house in her name wouldn't have helped her avoid the situation she's currently in. She could have moved into the second house and stopped paying the mortgage on the first one, but she still wouldn't have been able to pay her credit card bills and would have had to file for bankruptcy anyway.
(II) She hasn't engaged in any business transactions that would have required capital since then (that I'm aware of)
(III) She hasn't incurred any major debts since the transfer took place;
(IV) doesn't apply to the situation
I do believe the transfer of the house was not motivated by an intent to defraud the credit card companies and had nothing to do with her debt, but knowing her personally it's easy for me to say that. A judge may very well feel otherwise.
How concerned should I be about this?
She is going to consult with a bankruptcy attorney shortly. I haven't mentioned these concerns to her yet (I don't want to make it even more stressful than it already is). I would like to warn her so she can discuss it with the lawyer, but I'd like to know how serious it is before I say anything.
I hope this makes sense!

