Forbes has published an article, “Residence Under Water Due to Liens Not an Asset That Could be Fraudulently Transferred in Tootian”, which discusses how underground transactions are being used to stop creditors from taking properties. The article begins as follows:
Sometimes debtors will engage in a lot of shady transactions to save a property, but those transactions still do not rise to the level of a voidable transaction for the reason that there just isn’t equity in the property. Such is the case of In re Tootian (Goldman v. Dardashti), 2021 WL 4558290 (Bk.C.D.Cal., Oct. 5, 2021), where husband and wife debtors engaged in a long line of hinky transactions with relatives and others to try to save their Encino property from being taken by creditors. Among these transactions were apparently bogus foreclosures which were started and then stopped by friendly creditors to try to thwart the unfriendly creditors, numerous liens placed on the property by relatives, an apparently bogus short sale attempt, and even a lease to a college student relative who apparently had no ability to pay the $10,825 per month rental.
In other words, just the sort of junk that I and other creditor rights lawyers have to deal with daily. But, if nothing else, this opinion is a good read as an example of all the hijinx that debtors will do when they are in deep distress. But at the end of it all, the debtors were not successful in being able to keep their property and instead were forced to part with it in a short sale to one of their lenders. Two years after that sale, the debtors voluntarily filed for bankruptcy in the Southern District of California, and the Bankruptcy Trustee moved to set aside the sale.
Click here to see the full article: “Residence Under Water Due to Liens Not an Asset That Could be Fraudulently Transferred in Tootian”
Posted by Marin Larkin, Associate Editor, Wealth Strategies Journal.
Wealth Strategies Journal 