In June 2013, I received the settlement in my bank account. Within 5 weeks, I had it withdrawn and deposited into my son's account. I have roughly $20,000.00 in debt/lawsuits and work 6 days a week trying to make ends meet. I do not have a 401k and I lease my car and rent an apartment.
In July of 2013 you orchestrated a fraudulent transfer. If you file bankruptcy within 4 years of that transfer you risk having your son sued for the return of the funds. If you file bankruptcy within one year of that transfer you risk having your discharge denied. If you fail to disclose the transfer you commit a felony. If you had simply taken the settlement as an annuity you could have filed the bankruptcy and likely kept the money. Too late now to fix it on your own so I suggest getting a consultation with a bankruptcy attorney.
Under the facts you have listed, Chapter 7 wouldn't be an option.
The safer route would be to attempt to settle the debt and lawsuits you are facing with the proceeds of your previous lawsuit. Depending on the stage of the litigation you are facing, you could file a Chapter 13 Bankruptcy which is a reorganization plan. In a Chapter 13 with your circumstances you would have to pay 100% of the money owed on these other debts over the course of the Chapter 13 plan (3-5 years).
Settling the debts may be more cost effective and less of a headache.
You should withdraw $20,000 of the money you put in your son's account and pay off your debts. If you file bankruptcy you will have to disclose the money you deposited to your son's account and the trustee will sue to recover it. The result will be that filing will cost you much more than just paying off the debt since you will have to pay the trustees commission and attorney fees. You should check with an attorney and see how much of the settlement you can exempt if you get it back in your account.
You should not file. If the settlement was in your name, then the transfer to your son would be deemed an inside transaction designed to circumvent your creditors. I would suggest working with a competent attorney to work on safeguarding your personal injury settlement while avoiding creditor claims through lawsuit and garnishment. Find a good lawyer on this one!
Your question all attorneys should state is YES! You simply ask can you file! YES. The ramifications of filing is a separate issue. First thing you want to know is in your state if you still had those monies can it be exempted? If so, then have it transferred back or just list it as being located in your sons account if it is just being stored there and not hiding it from bankruptcy court. I am not sure of the arrangement. But best if in own account. The court can go back NOT only one year, but up to 4 or 5 years under a different law called the Uniform Fraudulent Transfer Act which the Bankruptcy Code incorporates every state law as an additional right of the trustee to pursue if they know about it. Of course you must list that income in the Statement of Financial Affairs for 2013 income #2 so the trustee will read that and ask about it anyway. The mere fact you have the money in the account per se is not fraud or wrong..you can put your money anywhere you want. BUT ...if you lied to anyone in court documents or IRS etc..then that is a problem. So, get an attorney, see about exemptions and move on with your options and then exercise one of them..but ONLY after discussing with an experienced bankruptcy attorney! PS If you filed any prior ch 7 within last 8 years, then you can still file, but wont receive a discharge unless you wait till more than 8 years after filing the prior one!
Attorney Gleason has it pegged correctly.
You can file it but I can assure you that there are a number of issues here.
First you have to disclose any transfers made within 2 years of your bankruptcy filing in your Statement of Financial Affairs. You would also have to disclose income from all sources, including those not involving the operation of a business or earnings or wages.
Second, even if you don't disclose it, if you are holding it in your son's name you have to disclose that too as property held for another.
Third, if you had a personal injury settlement I am certain if there was no lawsuit, there is still some income tax form out there, even if its a 1099 Misc. And even if not, your lawyer or you gave the settling insurance company a W9 and there is a cancelled check.
Then fourth. Your check was deposited in your bank account. Then it left your bank account and went to your son's account.
Fifth your son paid nothing for this, so this is a fraudulent transfer and the proof will be that you intended to mislead or defraud creditors.
Sixth, your son is now going to be named as a defendant either in a state court action for fraudulent transfer or in a bankruptcy court turnover proceeding.
Finally, you could go to jail for it.
And for all that its worth, you will likely not get a discharge and lose significantly more than the $20k in debts that you owe. See also In re: Alfons, 94 BR 777 (S.D.Fla. 1988); Chalik v. Moorefield (In re Chalik), 748 F.2d 616, 618 (11th Cir.1984).
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