Ulysses has a number of creditors and has recently realized that within a year he will have to declare bankruptcy.Ulysses transfers his house to his wife and uses most of his remaining assets to pay owed taxes to the government in order to avoid possible prosecution.He declares bankruptcy four months later.Which of the following is true?

Question

Quizplus · Accepted Answer

Ulysses transferring his house to his wife and using most of his assets to pay owed taxes to the government in order to avoid possible prosecution are both voidable transactions under bankruptcy law. However, the settlement of the house is considered a preference under bankruptcy law, which makes it voidable, while the payment of owed taxes to the government is not considered a preference, and is therefore not voidable. Thus, only the settlement of the house is void.

Ulysses Has a Number of Creditors and Has Recently Realized