Avoidable Transfers

Bill Collector with Waxed Handlebar Moustache:  “I have a writ of execution to seize your tuba.     Hand it over.”

Judgment Debtor in Faded  T-shirt with Holes:  “You’re too late.   I sold it to my roommate yesterday for a dollar.”

Bill Collector:  “That’s an avoidable transfer. I’m taking the tuba.”

Judgment Debtor:  “Says who?”

Bill Collection:  “Says the law of avoidable transfers.”

Now the gloves are off.  We’re going to get into some real law in this column.

Oregon law provides that a transfer is avoidable (subject to being undone by a court) if the transfer is either for the purpose of avoiding payment to a creditor or if the transfer was made at a time when the transferor was insolvent and the transfer was for less than fair market value.

“Come again,” you say.

  1. If a creditor can show that the transfer was for the purpose of avoiding payment to a creditor, a court will undo the transfer (return the asset  to the debtor who transferred it) so the creditor can seize it.
  2. If a creditor can show that a transfer was made at a time when the transferor was insolvent (debts exceeded assets) and that the transfer was made for less than market value, the same rule applies.

“Okay, I get it now,” you say, “but why do I care?”

“Forewarned is forearmed,” we say, smugly.

“What’s that supposed to mean?“ you ask, quite reasonably.

“We are an Ashland  law firm. We use theatrical expressions to explain things.”

This article is intended only to give an overview of voidable transfers.  For legal advice please consult with your attorney.