Legal Question in Bankruptcy in Texas

gift recipient

My fiance's father gave her two separate cash gifts last year for a total of $11000. She immediately paid off her credit cards (which were all from college related expenses), which totalled the same amount as the gift.

Now, her father is filing Chapter 7 (6 months later). Will she/we be forced to repay the gift? If so, are lenient payment arrangements available? We do not have the money, but I want to do what is right. Please advise.


Asked on 4/06/03, 4:25 pm

1 Answer from Attorneys
Michael Dover Michael A. Dover, PC

Re: gift recipient

yes, the chapter 7 trustee may seek to avoid the gift as a fraudulent transfer. A fraudulent transfer generally occurs in one of two situations: (1) where the debtor makes a transfer with the intent to defraud existing creditors (least common) or (2) the debtor makes a transfer for less than reasonably equivalent value (in other words, the debtor gives substantially more than he receives in return)made when the debtor was insolvent at the time of the transfer or was made insolvent by the transfer. Your best chance for defending against the fraudulent transfer action would be to show that the debtor was not insolvent time of the transaction. That is probably a longshot, it would be unusual for a debtor to be solvent and then 6 months later file for bankruptcy.

Most trustees would settle and allow you to make monthly payments or might be willing to settle for a lesser amount if you can make a lump sum payment.

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Answered on 4/07/03, 10:57 am


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