[{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.fight13.com\/what-is-a-fraudulent-conveyance-in-a-bankruptcy-case#BlogPosting","mainEntityOfPage":"https:\/\/www.fight13.com\/what-is-a-fraudulent-conveyance-in-a-bankruptcy-case","headline":"What Is A Fraudulent Conveyance In A Bankruptcy Case?","name":"What Is A Fraudulent Conveyance In A Bankruptcy Case?","description":"Bankruptcy trustees are given the power under 11 U.S.C. \u00a7 548 to avoid certain transfers made by a debtor of assets that unfairly place them beyond the reach of creditors. A \u201cfraudulent conveyance\u201d is a transfer of the debtor\u2019s assets to a third party with the intent to prevent creditors...","datePublished":"2017-04-04","dateModified":"2025-09-19","author":{"@type":"Person","@id":"https:\/\/www.fight13.com\/attorneys\/matis-h-abarbanel#Person","name":"Matis Abarbanel","url":"https:\/\/www.fight13.com\/attorneys\/matis-h-abarbanel","identifier":55,"image":{"@type":"ImageObject","@id":"https:\/\/www.fight13.com\/wp-content\/uploads\/2025\/09\/matis-abarbanel_avatar-96x96.png","url":"https:\/\/www.fight13.com\/wp-content\/uploads\/2025\/09\/matis-abarbanel_avatar-96x96.png","height":96,"width":96}},"publisher":{"@type":"Organization","name":"Loan Lawyers, LLC","logo":{"@type":"ImageObject","@id":"https:\/\/www.fight13.com\/wp-content\/uploads\/2020\/03\/icon-logo.png","url":"https:\/\/www.fight13.com\/wp-content\/uploads\/2020\/03\/icon-logo.png","width":600,"height":60}},"image":{"@type":"ImageObject","@id":"https:\/\/www.fight13.com\/wp-content\/uploads\/2020\/03\/fraud.jpg","url":"https:\/\/www.fight13.com\/wp-content\/uploads\/2020\/03\/fraud.jpg","height":465,"width":800},"url":"https:\/\/www.fight13.com\/what-is-a-fraudulent-conveyance-in-a-bankruptcy-case","about":["Bankruptcy"],"wordCount":621,"keywords":["bankruptcy"],"articleBody":"Bankruptcy trustees are given the power under 11 U.S.C. \u00a7 548 to avoid certain transfers made by a debtor of assets that unfairly place them beyond the reach of creditors. A \u201cfraudulent conveyance\u201d is a transfer of the debtor\u2019s assets to a third party with the intent to prevent creditors from reaching these assets to satisfy their claims.There are two types of fraudulent transfers under federal bankruptcy law. The first is actual fraud which involves the intent of a debtor to defraud creditors. The second is constructive fraud which typically involves a transfer made in exchange for grossly inadequate consideration. \u00a7 548 addresses constructive fraud and fraudulent conveyances.Constructive fraud requires that, in exchange for the transfer, the debtor received less than \u201creasonably equivalent value,\u201d and the debtor is insolvent or unable to pay debts either at the time the transfer was made or as a result of the transfer.Bankruptcy trustees focus on whether the debtor received reasonably equivalent value rather than intent. If nothing of value is exchanged for the transfer of the debtor\u2019s property, obviously, the debtor has received less than \u201creasonably equivalent value.\u201d However, not infrequently, something of value is exchanged for the debtor\u2019s property and it must, therefore, be determined if the value received by the debtor was sufficient compensation for the property.Bankruptcy courts will examine all of the circumstances surrounding a transaction to determine whether an exchange involved \u201creasonably equivalent value.\u201d Some of the factors considered by courts include whether a sale was for fair market value, whether a transaction was made in good faith in the ordinary course of business by independent parties, the competitiveness of bids for the property, and the effect on the debtor\u2019s estate with respect to funds available to unsecured creditors.Once the trustee has deemed a transfer as fraudulent, the trustee may recover the value of the property or the property itself and add it to the bankruptcy estate. While a trustee may recover the property from the immediate recipient or a subsequent transferee, the trustee may not recover the property from a bona fide purchaser (BFP). A BFP is an individual who acted in good faith and purchased the property without notice of any other claims or outstanding rights related to the transferred property. Thus, in this circumstance, a bona fide purchaser retains the property.Another exception is if valuable improvements have been made to the property by a transferee. In this situation, the transferee is given a lien on the property to secure the value of the improvements. Prospective bankruptcy debtors considering the transfer of an asset of their future bankruptcy estate must consult with an experienced and knowledgeable bankruptcy attorney to ensure that such transfer does not qualify as a fraudulent conveyance under the Bankruptcy Code.Contact our Fort Lauderdale bankruptcy lawyers today by calling 954-523-HELP (4357) and see how we can help.About the AuthorLatest PostsMatis AbarbanelMatis Abarbanel is the founding partner and senior attorney at Loan Lawyers in South Florida. He focuses his practice on consumer rights, helping homeowners navigate issues such as foreclosure and financial hardship. Matis also brings a wealth of experience from his previous work in personal injury law. As a devout Chasidic Jew, he is committed to making a positive impact in his community and dedicates his efforts to charitable initiatives through his non-profit organization, The Center, which aids at-risk Jewish youth. Matis actively serves clients across South Florida and is passionate about empowering individuals to secure their rights and achieve a better future.When Foreclosure Errors by Lenders Lead to Legal Remedies for Homeowners in Fort LauderdaleWhat Homeowners Can Do When Loan Documents Contain Forged or Altered SignaturesUnderstanding Florida\u2019s Debt Forgiveness Programs and IRS Rules"},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"What Is A Fraudulent Conveyance In A Bankruptcy Case?","item":"https:\/\/www.fight13.com\/what-is-a-fraudulent-conveyance-in-a-bankruptcy-case#breadcrumbitem"}]}]