Back to News

Harder to Hide From Creditors in Pennsylvania

Published on

March 14, 2019

The February decision by the U.S. Court of Appeals for the Third Circuit held that a bankruptcy trustee advancing a fraudulent transfer claim under the Pennsylvania Uniform Fraudulent Transfer Act (PUFTA) could pursue earnings deposited directly into a bank account owned jointly by the debtor and the debtor’s spouse as tenants by the entireties.

The February 20, 2019, decision in the case of In Re: Paul H. Titus, ___ F.3d ___, 2019 WL 693026 (3d Cir. February 20, 2019), addressed an issue of first impression for the court. The court held that the debtor and the spouse were individually liable for a fraudulent transfer under the act. Under PUFTA, if wages deposited into a joint account are used to pay reasonable and necessary household expenses, the wage transfer is not fraudulent to that extent.

When calculating the liability for a fraudulent transfer in a comingled entireties account, a court should follow a pro rata approach. That approach would presume, absent other evidence (such as available tracing evidence), that spending out of the account was in direct proportion to the percentages of fraudulent wage deposits and non-fraudulent deposits. The pro rata approach avoids the need to trace funds from their source to a particular “non-necessary” expenditure.

The court’s ruling makes life easier for a fraudulent transfer claimant. Rather than proving which dollars were used to pay for account withdrawals for non-necessary expenses, when there are multiple sources of deposits, a percentage may be applied to determine the recovery of non-necessary withdrawals.

The court provided a formula:

Liability = (Non-Necessity Spending) minus (Nonwage Deposits)


Related News

View More News
Press Release
March 14, 2023

Barley Snyder Partner Paul G. Mattaini Recognized with Champion for Women Award by the Pennsylvania Bankers Association

For Immediate Release Lancaster, Pennsylvania. – Barley Snyder is pleased...

Learn More
News Alert
March 14, 2023

New ASTM Standard Recognized by U.S. EPA for Phase 1 Reports Now in Effect

The U.S. Environmental Protection Agency (EPA) took final action to amend t...

Learn More
News Alert
March 13, 2023

Silicon Valley Bank and Signature Bank Fail; Regulators Move to Limit Systemic Risk

On Friday, March 10, the largest bank failure since the 2008 financial cris...

Learn More

Other Upcoming Events

View All Upcoming Events
Mar
21
12:00 pm
-
1:00 pm

Bank Regulation & Failure: A Discussion on Current Events in the Banking Industry

Learn More
Mar
23
12:00 pm
-
6:00 pm
event
Location

LendiCon 2023

Learn More
May
12
8:00 am
-
4:45 pm
event
Location

40th Annual Employment Law Seminar

Learn More

Get in Touch

Our attorneys, paralegals and staff look forward to hearing from you. Please reach out to let us know how we can help.

Get In Touch
RECOGNIZED IN
Super Lawyers
Best Law Firms US News
Best Lawyers