Expert: Mark J. Markus- California Bankruptcy Attorney - 4/27/2004

Question
-i purchased the car with full cash payment back in 2000 as gift for her, and she has been the only driver of the car.  i didn't owe my mother any money, didn't receive money from her at the time.  if the situation is favorable to the trustee, is it possible to arrange an installment type payment for the car in this situation as i simply do not want to lose my mother's car
thanks again------------------------
Followup To
Question -
hi, thank you for your service
i just had the trustee hearing and a problem arose about which i am seeking a second opinion.
i filed ch7 with no other assets other than a car whose title i transfered to my mother back in july '03. worth ~ 11k which is within exemptible limit in nj with wildcard + auto.
the trustee says she'll go after the car, to which my lawyer replied that then he'll exempt it.
trustee replied that it was a preferential treatment of creditor and that voluntary transfers are not exemptible.  if the matter goes to court my lawyer says that without fraudulent intent(there is none) the case is a clear winner.  not sure if i should go to court or negotiate settlement
thank you
Answer -
I cannot advise you without having a lot more relevant facts.  For example, at the time the car was transferred, did you owe money to your mother?  Intent is not a required element for the Trustee to prove if the transfer took place within one year prior to filing the bankruptcy case.  It also probably doesn't matter that the vehicle would have been otherwise exempt (although that really depends on the specific Judge that you have).

Answer
Well, you might be able to negotiate terms of payment with the Trustee, but usually not for more than a few months worth.  One main question the court is going to have is why, if you purchased the car "as a gift for your mother" in 2000, did you wait until July of 2003 to transfer title to her?  That somewhat flies in the face of your position.  The problem here is that section 548 of the Bankruptcy Code allows the Trustee to recover the transfer of any assets made within one year of the bankruptcy filing if you received less than reasonably equivalent value for the asset (i.e., a gift) and you were insolvent on the date of the transfer (meaning you owed more money than you could afford to pay). Intent is not relevant.