Sounds bad right? It is. This term refers to any deed or gift or other transfer of an asset that a debtor makes before filing bankruptcy if that transfer was made: (a) in an attempt to hide, remove or conceal assets from creditors and the Trustee; or (b) was simply made by the debtor without the debtor receiving in kind a fair value for the transfer.
The bankruptcy Trustee in your case has the power to sue you and the person or “entity” that received the benefit of the transfer. The Trustee can rely on Federal bankruptcy law or any law that exists in your State that allows creditors to recover property when unfair or fraudulent transfers are outside of bankruptcy.
If the Trustee wins such a lawsuit, the Trustee can recover the assets or get a money judgment for their value against anyone who receive some benefit from the improper transfer. And here’s the worst part. If the asset you transferred was a home or some other property that you could have claimed as “exempt” or otherwise protected with proper planning, you will lose the right to claim that exemption.