Creditor's Rights

Question 1

Grantor

Answer 1

(a.k.a. Transferor or Debtor): The person or entity that transfers property or assets. This is usually the debtor who is trying to shield assets from creditors.

Question 2

Grantee

Answer 2

(a.k.a. Transferee or Recipient): The person or entity that receives the property or assets from the grantor.

Question 3

Tenancy by the Entireties

Answer 3

Can only be used to satisfy joint debts of the spouses. An individual spouse’s debt cannot be enforced against property held as tenancy by the entirety.

Question 4

Fraudulent Transfer

Answer 4

Any gift, conveyance, assignment, or transfer made with the actual intent to hinder, delay, or defraud creditors

Question 5

Who may void a fraudulent conveyance?

Answer 5

Every creditor existing at the time the conveyance was made, or who becomes a creditor thereafter

Question 6

Is the right to void a fraudulent conveyance personal to the creditor?

Answer 6

No, may also be enforced by their successors and assigns

Question 7

What must creditors do if property is in the hands of a good-faith purchaser for value?

Answer 7

Attach the proceeds of the sale in the hands of the debtor

Question 8

Good Faith Purchaser

Answer 8

Purchaser unaware of fraudulent intent or insolvency

Question 9

What must be shown regarding the grantee to establish fraudulent intent?

Answer 9

That the grantee had actual or constructive notice of the grantor’s intent

Question 10

What are examples of ‘badges of fraud’?

Answer 10

• Close relationship of the parties
• Gross inadequacy of price
• A grantor’s insolvency
• Retaining possession by the grantor
• Pursuit of the grantor by creditors
• No security taken for the purchase money

Question 11

Transfers between an indebted spouse and their spouse are

Answer 11

presumed to be fraudulent and are voidable at the suit of either existing or future creditors

Question 12

How can the presumption of fraud for spousal transfers be rebutted?

Answer 12

By clear and satisfactory evidence showing consideration for the transfer or that the transfer was a bona fide gift

Question 13

What can creditors at the time of the transfer do regarding a fraudulent transfer?

Answer 13

File a motion to set aside the transfer as fraudulent or voluntary

Question 14

What must creditors establish to prove fraudulent intent?

Answer 14

Clear, cogent, and convincing evidence

Question 15

What happens if creditors are successful in proving fraudulent intent?

Answer 15

The title to the property is restored to the owner prior to the fraudulent transfer

Question 16

Doctrine of Necessaries

Answer 16

In Virginia, the doctrine of necessaries imposes joint liability on spouses for each other’s essential expenses, particularly medical debts, and on both parents for their child’s medical expenses. This means creditors can pursue either spouse for payment, even if only one spouse entered into the financial agreement for the necessary care.

Question 17

Creditor’s Rights to a Joint Bank Account

Answer 17

A creditor of one owner in a joint tenancy account with the right of survivorship may reach the debtor’s share of the account. Va. Code §6.2-606.

There is a presumption of equal ownership between a husband and wife in a joint account unless proven otherwise.

Question 18

Garnishment Procedure

Answer 18

After 21 days from the entry of a judgment order, the judgment creditor may file a Suggestion in Garnishment to request a writ of execution and garnishment on the debtor’s bank account.

Question 19

Homestead Exemption

Answer 19

A judgment debtor may claim a $5,000 homestead exemption in funds held in a bank account. Va. Code §34-4.