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Trustee Powers and Prepetition Transfers

shutterstock_1615982104Pursuant to 11 U.S.C. § 548(a)(1)(B) the trustee can keep away from sure transfers made inside two years earlier than the petition submitting date.

Part 548(a)(1)(B) in pertinent half, supplies: 

  • if the debtor obtained much less a fairly equal worth in alternate for such switch or obligation and,
    (I)  was bancrupt on the date that such switch was made . . ., or turned bancrupt on account of such switch . . .;

(III) supposed to incur, or believed that the debtor would incur, money owed that may be past the debtor’s means to pay as such money owed matured.

(IV) made such a switch to or for the advantage of an insider, or incurred such obligation to or for the advantage of an insider….


The chapter goal of the avoidance powers in Part 548 is to guard collectors from prejudice ensuing from transfers of the debtor’s property for lower than honest consideration, leading to diminution of the debtor’s property obtainable to the pay collectors. Transfers of belongings and sale or belongings is usually a level of rivalry in chapter instances.


That is very true when a debtor doesn’t suppose they’ve any curiosity within the asset. For instance: debtor’s pal purchases a automobile however titles the automobile within the debtor’s identify. The automobile is paid for by the debtor’s pal. Years later, debtor’s pal decides to present the automobile to his daughter and asks the debtor to signal over the title to his daughter and no cash is exchanged. Six months later, debtor information for chapter. Is that this a fraudulent switch which may be avoidable by the trustee-it is an effective chance, will probably be prevented. The aim of the fraudulent switch legislation is to stop hurt to collectors by a switch of property by the debtor. If the automobile transferred by the debtor was value $10,000 and the debtor obtained nothing in alternate for the switch, this switch would diminish the debtor’s property.


The goal of part 548 is to guard the property itself for the advantage of the collectors.




The legislation makes obtainable to collectors these belongings of the debtor which can be rightfully part of the chapter property, even when they’ve been transferred away. Contact the attorneys at LifeBackLaw and see us at  and allow us to assist you get your life again.




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