Fraudulent & Voluntary Conveyances 55-80

Question 1

Generally under §55-81 Fraudulent Conveyances & Voluntary Conveyances

Answer 1

Both code sections make certain conveyances of property by a debtor void and subject to be set aside by a court, thus returning the property to the debtor and subject to the reach of creditors.

Question 2

Fraudulent Conveyances

Answer 2

VA law provides that any gift, transfer, or assignment given to delay, hinder, or defraud creditors can be set aside and reached by the creditor

Question 3

Voluntary Conveyances

Answer 3

made while the debtor is insolvent or rendering the debtor insolvent is void as to creditors of the debtor at the time of the conveyance and can be set aside and the property reached by creditors.

Question 4

Causes of action

Answer 4

To challenge a gift after creditor already has a judgment creditor can get a writ of execution

Question 5

What happens if the transferee is a bona fide purchaser who paid fair consideration without notice of the creditor’s rights?

Answer 5

The transferee keeps the property, and the creditor must go after the money the purchaser paid to the debtor.

Question 6

What if the transferee is a bona fide purchaser who paid less than fair consideration?

Answer 6

The purchaser must give up the property, but he gets a lien on it for the amount paid to the debtor, plus any improvements.

Question 7

Preference Among Creditors

Answer 7

Under §55-80 (Virginia’s fraudulent transfer law), a debtor is generally allowed to prefer one creditor over another, provided the payment or transfer is a bona fide payment and in exchange for full value.

Question 8

Fraudulent Preference

Answer 8

If the debtor is insolvent and transfers assets to a creditor under circumstances that give the creditor an unfair advantage over others (e.g., insider dealings), the transfer may be deemed a fraudulent preference under §55-80.

example: When a stockholder of an insolvent corporation, which was also a debtor of the stockholder, had corporate assets transferred to the stockholder to satisfy his claim against the corporation, it was held to be a voidable fraudulent preference under §55-80.