Q: Can a business avoid paying a debt by giving assets to someone else? (Debt was a mortgage for an investment property).
My girlfriend owns her own business which is incorporated. She's the only employee and works out of our home. We live together. A few years ago, her tech business invested in a coastal property.
1- At the same time, my gf & her ex-husband jointly owned a different property. They'd kept the 50/50 ownership after divorce. Her business was not involved. When this jointly owned property sold, she took her ex's equity & applied it to her business's property debt. Her business had stopped paying this mortgage the year before. Her ex was not part of her business & not on the deed. Is this an issue?
2 - Also, she gave me about $100,000 through real estate transactions (these were personal transactions but she could have paid the bank). This was shortly before the business-property's foreclosure date. I paid off my own real estate debts. She closed her tech company & opened another, then closed that. Everything was in NC. Are we ok?
Would appreciate any comments.
A: It depends on the transaction and how it is structured. Generally you can't avoid debts by transferring property and assets to insiders, particularly for no payment. The creditor can file an action to avoid the transfer based on several factors. Thus, if you are tranferring assets, it has to be for a legitimate business purpose and for the value of the asset. Since your questions are fairly detailed, you will need to discuss the transactions with an attorney for complete assistance.
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.
