Insights

Ningbo debtors free of charge to transfer property to their spouses how to do.

Ningbo Author：LuXu WANG

What should the creditor do if the debtor does not repay the debt, but transfers the property and vehicle to his spouse free of charge through divorce? Conclusion: Creditors can not only sue the debtor, but also revoke the transfer of property that impairs the realization of creditor's rights according to the system of creditor's cancellation right in the Civil Code. If the property has been transferred and registered, it will not affect the exercise of the right of cancellation. The canceled act has no legal binding force from the beginning, and the property should be restored to the debtor's name for paying off debts.

1. Legal Basis: A Breakdown of the Provisions on the Creditor's Right of Revocation

Article 538th of the Civil Code stipulates: "If the debtor disposes of the property rights and interests without compensation by giving up his creditor's rights, giving up the creditor's rights guarantee, transferring the property without compensation, or maliciously prolongs the performance period of his due creditor's rights, which affects the realization of the creditor's claim, the creditor may request the people's court to revoke the debtor's behavior. By transferring real estate and vehicles to the spouse without consideration through a divorce agreement, one is engaging in a quintessential act of “gratuitous transfer of property,” which falls within the scope of regulation under this provision. Article 539 further regulates the situation of paid but obviously unreasonable: if the debtor transfers property at an obviously unreasonable low price, assigns other people's property at an obviously unreasonable high price or provides guarantee for other people's debts, which affects the realization of creditor's claim, if the debtor's counterpart knows or should know the situation, the creditor may also request the people's court to cancel it.

The consequences and time limit of the exercise of the right of revocation can be found in Articles 540 to 542: Article 540 stipulates that the scope of the exercise of the right of revocation shall be limited to the creditor's claim, and the necessary expenses for the creditor to exercise the right of revocation shall be borne by the debtor; Article 541 stipulates that the right of revocation shall be exercised within one year from the date when the creditor knows or should know the cause of revocation; article 542 provides that if the debtor's act affecting the realization of the creditor's claim is revoked, it shall not be legally binding from the beginning. Three provisions constitute a complete chain of rules: the scope is limited to the claim, the exclusion period of one year (from the time of knowledge) and five years (from the time of the occurrence of the act), and the act is null and void from the beginning after revocation.

2. Core requirement: When can the divorce property division be revoked?

  1. The debt arose first, or the harmful act occurred first.: The debtor already has debts when implementing the gratuitous transfer, or the transfer leads to the obvious decline of its solvency and the inability to pay off the due debts. If the transfer of property occurs before the formation of the debt, the creditor has no right to revoke it-if there is a liability after the transfer, it does not constitute "affecting the realization of the claim".
  2. gratuitous: in the divorce agreement, one party leaves the house clean or obviously shares more property to the other party, which is essentially a gratuitous or almost gratuitous property transfer. It is necessary to distinguish between normal divorce property division: if the result of the division is generally balanced and includes reasonable consideration factors such as housework contribution and maintenance compensation, it is generally not considered to be a revocable free disposition.
  3. Impairment of creditors’ rights: After the transfer, the debtor’s remaining assets are insufficient to satisfy the debt. If the debtor has other sufficient assets to satisfy the debt, the right of rescission generally does not arise.
  4. Unexpired Period: Prosecute within one year from the date of knowing the cause of cancellation, and the act has not occurred for more than five years.

3. Situation breakdown: divided by time and target.

Split according to the behavior time: the gratuitous transfer occurred in the three stages after the formation of the debt, before the lawsuit and before the execution can all claim to cancel, but the difficulty of proof is increasing-if the debt is divorced and the property is transferred within a short period of time (for example, within a few months) after the formation of the debt, the coincidence of the timeline itself is a powerful clue; if the property is transferred in the execution stage, suspected of a crime is transferred to the public security organ. Split by object: if it is transferred to spouse, to children, to parents or other relatives, the rules are the same, and all are based on gratuitousness and damage. Except for the necessary expenses for education and living transferred to children. Split by form: real estate, vehicles, equity, deposits free transfer can be revoked.

4. Operable steps: The creditor's five-step path

  1. Obtained effective creditor's rights documents: firstly, confirm the creditor's rights through litigation, arbitration or notarized creditor's rights documents, and specify the amount of creditor's rights and the time limit for settlement.
  2. Investigate the marriage and property change of the debtor: check the real estate transfer record (real estate registration agency), vehicle registration (vehicle management office), and equity change (enterprise registration file of market supervision department), and sort out the property flow before and after the divorce.
  3. Retrieve the divorce agreement: Apply to the marriage registration authority to review the divorce registration file, with particular attention to whether the property division provisions are manifestly unfair.
  4. bring creditor's right of rescission action: bring a lawsuit to the competent court within the legal time limit, and list the debtor as the defendant and his original spouse as the defendant or the third person.
  5. Apply for property preservation and execution: apply for preservation synchronously during the period of revocation right litigation to prevent the revocation property from being transferred again; after the judgment takes effect, restore the registration to the name of the debtor, and then apply for compulsory execution.

5. Common misconceptions

Myth 1: A divorce property settlement agreement is irrevocable.

Error. The personal relationship provisions (child support, etc.) in the divorce agreement are not affected by the right of revocation, but if the property division clause harms the interests of creditors, it may be revoked in accordance with the law.

Myth 2: Once the property has been transferred, it cannot be recovered.

Error. After the right of revocation is established, the disposition of the disposed property is null and void from the beginning and may be resumed for registration, and the transfer itself does not constitute an obstacle.

Misconception 3: You can only sue the debtor personally.

Error. The counterparty to the dispositive act (the former spouse) should be designated as either a defendant or a third party, so that the judgment can directly resolve the issue of property restoration.

Misunderstanding 4: You can sue slowly after knowing that the other party transfers the property.

Error. The right of revocation has a one-year period of exclusion, which is calculated from the date when the cause of revocation is known or should be known. If the right of revocation is not exercised within the time limit, it must be acted upon as soon as possible.

6. Case verification and judicial guidelines

Sort out according to the similar adjudication rules: if the debtor owes 1.2 million yuan but does not repay it, he divorces his spouse by agreement and gives the only house under his name to his spouse free of charge, and the creditor's lawsuit is canceled. The court found that the property division clause was a free disposition, damage to the realization of the claim, the judgment revoked the corresponding clause, the property was restored to the debtor's name to pay off the debt, the cost of litigation by the debtor. The path of the case is: confirmation of the claim in the first place, investigation of fixed evidence, prosecution within one year, and simultaneous preservation.

The judgment of the whole country has been quite unified: if the debtor evades the debt by transferring the property without compensation through the divorce agreement, the creditor can exercise the right of revocation according to Article 538 of the Civil Code; if the spouse knows the debt and is transferred without compensation, he can not oppose the creditor with the "divorce agreement. The Supreme People's Court and local courts have repeatedly confirmed this rule in post-divorce property disputes and creditor revocation disputes, and the Ningbo court is consistent with the national standard.

7. Coordination with enforcement and bankruptcy procedures

Creditor's right of revocation litigation should be coordinated with the debt settlement procedure: apply for property preservation at the same time when the lawsuit is revoked, freeze the property under the name of the debtor and his former spouse, and prevent the second transfer during the litigation period; after the judgment is revoked, the disposed property will be restored to the debtor's liability property, and the creditor will apply for enforcement with the effective creditor's rights documents. A common obstacle in the enforcement process is that the spouse has resold the property to a third party: if the revocation judgment declares the original disposition null and void from the beginning, but the third party has obtained it in good faith (paying reasonable consideration and completing registration), the creditor cannot directly recover the property itself, and may turn to claim the price or compensation from the spouse's disposition, and list the spouse as the defendant in the prosecution to find out the whereabouts of the price. In the case of false divorce and debt evasion, if the creditor discovers that the debtor and his spouse colluded to forge a divorce agreement or fictitious debts, it may report to the public security organ in addition to civil litigation, and if the circumstances are serious and suspected of refusing to execute the judgment, ruling or false litigation, criminal clues and civil relief go hand in hand.

The cancellation path of the debtor after entering the bankruptcy procedure is different: within one year before the acceptance of the bankruptcy application, if the debtor pays off or disposes of the property without compensation to individual creditors or deals at an obviously unreasonable price, the bankruptcy administrator shall exercise the cancellation right or request to confirm it is invalid in accordance with Articles 31 and 32 of the Enterprise Bankruptcy Law. The space for the creditor to file the cancellation right lawsuit is limited, and the administrator should be cooperated. Therefore, creditors find the timing of the transfer sooner or later to decide the path choice: the debt has not yet entered bankruptcy, go to the Civil Code Article 5

38of the avoidance litigation.

File check and evidence list of 8. creditors

In a lawsuit to rescind a contract, success hinges half on the evidence. It is suggested to prepare according to six categories: first, evidence of creditor's rights, effective judgment, mediation statement, arbitration award, notarized creditor's rights document or IOU and collection record, which proves that the creditor's rights are real and have expired; The second is to transfer evidence, divorce agreement, divorce registration file, real estate transfer record, vehicle change record and equity change file, to prove that the property flows to the spouse free of charge. Third, time evidence, the comparison between the time of debt formation and the time of transfer (loan contract, collection letter and transfer record) proves that "debt comes first and transfer comes later"; The fourth is the evidence of solvency, the result of property inquiry under the debtor's name, the ruling or property report that cannot be executed, which proves that the remaining property is not enough to pay off the debt; The fifth is the informed evidence (for the situation of paid or low-price disposal), to prove that the relative knew or should have known that the disposition harms the claim; Sixth, the evidence of limitation, the discovery of the time clue of the transfer (inquiry record, report record), used to prove that the prosecution did not exceed the one-year exclusion period. File search channels include real estate registration agencies, vehicle management offices, market supervision departments and marriage registration files. Some information can be initially checked through public channels, and then applied to the court for access in litigation, so as to implement the "check and check all.

9. Scenario Simulation: The Path to Success or Failure in a Lawsuit for the Right of Revocation

Company A sued Company B and won the lawsuit; the court ruled that Company B must pay 800,000 yuan for the goods. During the execution, it was found that Chen Mou, the legal representative of Company B, divorced his spouse by agreement one month before the judgment was made, and distributed the only house and a car registered in his name to his spouse free of charge, and there was no property available for execution under the company's name. Company A's strategy review: the first step is to obtain transfer records from the real estate registration agency and DMV to confirm that the transfer of property occurred after the formation of the debt; The second step is to apply to the marriage registration authority to consult the divorce agreement and lock in the free disposition clause of "the property and vehicle belong to the woman and the debt to the man"; The third step, within one year from the date of knowing the transfer fact (less than five years after the act occurred), the creditor's right of revocation was filed with the court, Chen Mou and his ex-wife were listed as co-defendants, and the property involved was applied for preservation. In the fourth step, the ex-wife argued in court that "divorce division is compensation for housework contribution", but the court did not adopt it because there was no corresponding payment and the division was obviously unbalanced. Step 5, the court ruled to revoke the property division clause in the divorce agreement, the property and vehicle were restored to Chen's name, and Company A immediately applied for compulsory execution of the compensation. The key to success or failure tips: If Company A finds that the transfer is delayed for one year and then sued, the right of revocation is eliminated; If the property is personal property before marriage or the division is roughly balanced, it is difficult to revoke-timing and "gratuitous" judgment are the two major lifeblood of such cases.

class case reference: the creditor outside the case has canceled the transfer of the house involved in the divorce agreement through the creditor's cancellation right litigation, and the court has confirmed that the house ownership claimed according to the divorce agreement has lacked factual and legal basis, and revoked the first instance and rejected the plaintiff's application. That is, if the free transfer of property at the time of divorce harms the interests of creditors, it may be revoked by creditors in accordance with the law. Trial Court: Intermediate People’s Court of Ningbo City, Zhejiang Province Case Number: (2011) Zhe Yong Min Yi Zhong Zi No. 712

10. FAQ

Can the spouse defend against revocation by saying that "divorce division is not a gift, it is my fair share?

It depends on whether the division is balanced. If the division of divorce property includes reasonable consideration factors such as housework contribution and maintenance compensation, the court usually does not determine that it can be revoked; only the part of the property disposition that is obviously unbalanced, almost free of charge and impairs the realization of the claim constitutes the object of revocation, and the court will review the reasonableness of the division.

What evidence should be prepared for a revocation action?

Five types of evidence: effective creditor's rights documents; debtor's divorce agreement and registration files; real estate, vehicle, equity transfer records; debtor's remaining property status (proof is not enough to pay off); evidence of the time to know the cause of cancellation (used to prove that the exclusion period does not exceed one year).

It is written in the divorce agreement that "the property belongs to the woman and the debt belongs to the man". Can the creditor cancel the property clause?

If the real estate is the joint property of husband and wife and both parties divide it according to this, and the woman fails to pay the consideration and the man bears all the debts, which objectively reduces the man's liability property and damages the creditor's interests, the creditor can appeal to revoke the property division clause; the debt attribution clause cannot oppose the creditor.

XI. Practical Insights from a Lawyer

In the face of "divorce transfer", the most taboo thing for creditors is to only stare at the debtor himself to collect debts, while letting the property be divided in the divorce agreement. The real grasping hand is the creditor's right of revocation: the debtor gives the property and vehicle to his spouse free of charge through the divorce agreement, which is an act of disposing of the property free of charge, even if it has been transferred, it does not affect the revocation. Therefore, once the signs are found, the action should be quick, and the divorce agreement, transfer records and funds should be fixed first. The longer the time is delayed, the greater the risk that the property will be changed hands again.

The exercise of the right of revocation should fall on the essentials, not the emotions.What needs to be proved is that the debtor has disposed of the property at a free, or obviously unreasonable price, and this behavior affects the realization of your claim. Therefore, the evidence of the creditor's rights, the evidence of the transfer, and the clues of whether the other party was informed at the time of the transfer should be sorted out before the prosecution. If the property has been transferred, it shall be restored to its original state after revocation and then used for settlement. This order shall be clearly written in the application to avoid being sentenced to revocation but still not getting money.

In practice, the lawsuit of revocation right is often intertwined with enforcement, so it should be promoted as a whole: the sealed-up property should be applied for preservation together, and those that can be solved through enforcement procedures should be executed first, and those that need to be revoked to remove obstacles should be sued separately. There should also be an expectation of risk-if the counterparty can prove that the transaction price is reasonable and he is a bona fide transfer, the cancellation may not be successful, then turn to pursuing other property leads. Negotiations can make the other party understand that once the revocation is supported, not only the property will be spit out, but the disposer will also bear the corresponding trust and reputation costs, which is often more conducive to reconciliation than simply debt collection.

The debtor transfers property without compensation by divorce, and the creditor has three axes: avoidance litigation (articles 538 to 542 of the Civil Code), property preservation, execution and bankruptcy path connection. The main points are fast-one year's exclusion period does not wait for anyone; Quasi-lock "free disposition + damage claims" two elements; All-the original spouse is listed as the defendant or a third person, and the resumption of registration and return of money are written into the sentence. In daily wind control, creditors check the debtor's marital and property status before lending or trading, and act in a timely manner when abnormal transfers are found, which is the lowest cost line of defense.