According to the Wall Street Journal, Danielle Staub, a Real Housewife of New Jersey star, has agreed to pay $35,000 to settle a fraudulent-transfer claim. Ms. Staub filed for Chapter 7 bankruptcy claiming $500,000 to $1 million in debts and the same amount in assets. The trustee’s investigation uncovered a potential fraudulent transfer by Staub. She made pre-petition transfers of assets to family members and friends. The assets included jewelry and home furnishings.
So, what is a fraudulent transfer? A fraudulent transfer occurs when a debtor transfers a non-exempt asset to a third-party to shield the asset from creditors. The Bankruptcy Trustee can make allegations in the bankruptcy case that certain transfers of assets to other people or entities constitute a fraudulent transfer. It is even possible to allege that the investment of money in exempt assets (such as annuities) constitutes a fraudulent transfer because these conveyances were done with the intention to hinder or avoid creditor collection.
When allegations of a fraudulent transfer are made, the trustee of the bankruptcy estate will conduct an investigation. The trustee must prove that reasonably equivalent value was not given for the transfer of the asset. Some of the factors courts have considered in making a determination are:
· whether the sale was for fair market value
· whether the transaction was made in good faith in the ordinary course of business by parties of independent interests
· the competitiveness of bids for the property
· the net effect on the debtor’s estate with respect to funds available to unsecured creditors
If a transfer is determined to have been fraudulent, the trustee may recover the property or the value of the property, and include it in the bankruptcy estate. In the case of Danielle Staub, her bankruptcy estate must be paid $35,000 by the end of the year.
If you are interested in learning how filing a bankruptcy case can benefit you, contact Levitt & Slafkes, P.C., at 973-323-2953. You can also reach us by filling out our online form. We represent debtors in Chapter 7, Chapter 13 and Chapter 11 filings. Let us help you get the fresh financial start you need today.