This post is the fifth in a series in which I discuss fraudulent transfers. This one deals with the consequences of fraudulent transfers, and the importance of prebankruptcy planning.
E. Denial Of Discharge And The Loss Of Assets
A discharge may not be available to a debtor who engages in prepetition fraudulent transfers:
The court shall grant the debtor a discharge, unless — . . . the debtor, with intent to hinder, delay, or defraud a creditor or an officer of the estate charged with custody of property under this title, has transferred, . . . or has permitted to be transferred, removed, destroyed . . . — . . . property of the debtor, within one year before the date of the filing of the petition . . .
And as I have discussed in great detail in my previous fraudulent transfer posts, the bankruptcy trustee can avoid the transfers and seize the assets. Furthermore, once the debtor has transferred the asset, it no longer belongs to the debtor, and cannot be exempted in the debtor’s bankruptcy.