A man I was suing gave all his property to his wife in their divorce and then filed bankruptcy. Can creditors challenge a divorce property settlement agreement?
Yes. You may have remedies under state law and/or federal law. The first test is whether the property was awarded to the spouse by the court after a trial or if the court merely “rubber stamped” an agreement between the husband and wife. If it is the latter situation, you may be able to attack the property settlement as a transfer of the debtor’s property to defraud his creditors under state law or as a preference or fraudulent conveyance under federal bankruptcy law. Be aware that there are time limits to file your challenge to the property settlement!
