QUESTION
Can I lose my boat after the seller declared bankruptcy?
Asked on Jul 27th, 2011 on Bankruptcy - Connecticut
More details to this question:
I purchased a boat in good faith. I paid cash. I did wait a few months before registering the boat and getting the title in my name. I found out that the seller declared bankruptcy. The bankruptcy attorney is writing and telling me that I have to give back the boat. I have the title in my name. 1. Can they really take the boat? 2. If so, what kind of legal action do they have to take to get it back. 3. Is there any way I can fight this?
7 ANSWERS
Bankruptcy Attorney serving Concord, CA
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William Rubendall Attorney at Law
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If you purchase property such as a boat from someone who then files bankruptcy the transaction is subject to being set aside as a voidable preference unless it was an arms length fair market value sale.
Answered on Jul 29th, 2011 at 11:42 AM
Glen Edward Ashman
The delay in registering the boat MAY have cost you your money and the boat. A lawyer needs to look at the case to answer that and you IMMEDIATELY should see a lawyer.
Answered on Jul 29th, 2011 at 11:33 AM
Bankruptcy Chapter 7 Attorney serving Jacksonville, FL
Partner at
Law Offices of Carol M. Galloway P.A.
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In general, if a Debtor transfers, or sells any property within 2 years of filing bankruptcy, the Trustee can file an action against the buyer of such property to reclaim the property. The Trustee's job is to administer the estate of the Debtor, and to protect the rights of the creditors. The rationale is that the Debtor could have paid his creditors by selling "the property," and turning those funds over to his creditors. In your scenario, the Trustee can "avoid the transfer" and "take" the boat. Rather than "turn over" the boat to the Trustee, the "buyer" can negotiate with the Trustee to retain the property, and pay back the equity to the Trustee. The Trustee will then disburse those funds pro rata to the creditors that filed claims in the Debtor's case. If the "seller" does not respond to the Trustee's demands, the seller may be sued by the Trustee. Sellers who are caught in this dilemma will often hire a creditor's attorney who can negotiate with the Trustee, and protect the rights of the "unaware" buyer.
Answered on Jul 29th, 2011 at 10:46 AM
Trusts and Estates Attorney serving Jacksonville, FL
Partner at
Law Office of David M. Goldman PLLC
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You should talk with a bankruptcy lawyer to see if your transaction is considered a preferential payment. If you are not related generally this is limited to 90 days prior to the filing of the bankruptcy.
Answered on Jul 29th, 2011 at 10:46 AM
If you did not record the title transfer in accordance with state law, the seller owned the boat until you did. So the title transfer, if it happened within 90 days of the filing, means your ownership can be undone. And you do not get any money back. YOU NEED A LAWYER-NOW
Answered on Jul 29th, 2011 at 10:38 AM
Bankruptcy Attorney serving Herndon, VA
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Maureen O'Malley
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I really don't understand. If you bought it in a standard commercial transaction, there should be no problem. I'd tell the lawyer I want to hear that demand from the trustee, along with an explanation.
Answered on Jul 29th, 2011 at 8:51 AM
It sounds as though you are involved in a possible fraudulent conveyance. This occurs when an item of personal or real property is sold for less than fair market value. If this has occurred, the transaction may be unwound and you may have to return the boat, but would receive your money or consideration back. There are not enough details here to give an adequate response, but this is a start. If you think you got a deal that is too good to be true, it just might be. Thanks for tuning in!
Answered on Jul 29th, 2011 at 8:05 AM
Information provided doesn't create an attorney/client privilege nor constitute an offer of services and is only general responses to hypotheticals