Legal Question in Bankruptcy in New Jersey
fraudulent transfer/tenancy by entireties
My wife and I owned property as husband and wife which we transferred to our children almost three years ago. I then filed a chapter 7 bankruptcy petition. The trustee is now seeking to undue the transfer as fraudulent and have the property sold. My question is a twofold one: 1)assuming that the trustee succeeds, will the property become one by tenancy by the entireties once again, and 2) will he be able to sell it to satisfy the creditors claims in view of the fact that I am the only one filing for bankruptcy.
1 Answer from Attorneys
Re: fraudulent transfer/tenancy by entireties
Three years is a long time and the trustee is fighting an uphill battle. Nevertheless, I hope that you have a lawyer working with you on this. It is nothing that you should be handling yourself.
A key issue will be whether or not you were insolvent at the time of the transfer.
In the usual case of fraudulent conveyance (I have not seen the papers), the conveyance would simply be set aside. That would mean that the title to the property would be restored to what it was. The Trustee can still sell the interest that you have, but there is NJ case law to the effect that the buyer cannot occupy the property as would normally be the case for a tenant in common. Further, your wife would get complete title should you predecease her. It is not likely that anyone would pay very much for such an interest.
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