In re: Neal

Debtor paid off a line of credit and a $28,000 loan from her parents and transferred her interest in the marital residence to her husband, Bruno. In a separation agreement, Debtor waived any claim to equity in the residence, about $27,500. Bruno agreed to pay the mortgage and retained four vehicles (marital property) plus three other vehicles and tracts totaling 60 acres, non-marital property. Debtor retained a 1999 Pontiac. Both waived claims to support and retirement accounts. Debtor later filed her chapter 7 no-asset petition, listing an $11,000.00 lien on the Pontiac and $60,763.48 credit card debt (both incurred during marriage). The Trustee filed an adversary complaint to recover the value of alleged fraudulent transfers, 11 U.S.C. 548(a)(1)(B), 544, 550. Bruno argued that in a contested divorce, he would have likely received support, insurance and part of Debtor’s pension. The bankruptcy court concluded that Debtor did not receive reasonably equivalent value and entered a judgment of $47,635.27. The Sixth Circuit affirmed that Debtor did not receive reasonably equivalent value, but remanded to amend the judgment to $4,532.98. It was unnecessary to consider the likely outcome of a contested divorce; the issue was comparison of the value Debtor received with the value Debtor transferred. View "In re: Neal" on Justia Law