This document summarizes a court case regarding what assets a creditor can attach after obtaining a money judgment against a debtor. It discusses how the debtor transferred his personal assets, including a house, cars, and bank accounts, into a family trust before a money judgment was entered against him. The appellate court ruled that the creditor could not force the sale of the house since it was held in a tenancy by the entirety. However, the transfer of the bank accounts to the trust was deemed fraudulent under the Uniform Fraudulent Transfer Act since the claims arose before the transfer and the debtor was insolvent. The document outlines the key lessons from this case regarding what assets are protected from creditors after a judgment.

1. Chicago Daily Law Bulletin - What assets can a creditor attach?
http://www.chicagolawbulletin.com/Articles/2015/07/22/Paul-Porvaznik-forum-7-22-15.aspx[7/22/2015 6:03:04 PM]
July 22, 2015 Print friendly page
Commercial
Litigation
By Paul B.
Porvaznik
Paul B.
Porvaznik is
an attorney
at Davis,
McGrath
LLC and practices
primarily in the areas of
commercial litigation,
landlord-tenant law,
mechanic’s liens and
post-judgment
enforcement.
What assets can a
creditor attach?
A 3rd District Appellate Court case
offers a good lesson on the
procedural and substantive hurdles a
creditor’s counsel must clear to
enforce a judgment against a
guarantor who transfers his personal
assets into a trust.
Heartland Bank and Trust sued David
A. Goers and others for breach of a
commercial guarantee after the
defendant’s company defaulted on a
$650,000 loan. The bank obtained a
money judgment against the
defendant and issued citation
proceedings against him. During
post-judgment proceedings, the bank
learned that before the money
judgment entered against the
defendant, he transferred all his
assets, including a house, cars and bank accounts into a family
trust.
The trial court ordered the defendant to relinquish one-half of
his bank and stock accounts, two cars and 50 percent of the sale
proceeds of his residence. The defendant appealed.
Reversing, the appeals court first held that the trial court
wrongly ordered the sale and turnover of 50 percent of the
house sale proceeds under the Uniform Fraudulent Transfer Act,
740 ILCS 160/1, et seq. Heartland Bank v. Goers, 2013 IL App
(3d) 12084-U.
The UFTA deems a transfer fraudulent against a creditor in two
instances:
For claims arising before or after the transfer, the debtor
transfers property with the actual intent to impede the
creditor.
For claims arising before the transfer, the debtor was
insolvent or became insolvent as a result of the transfer.
A “transfer” means the disposal of an “asset” — defined by the
UFTA as property of the debtor that is not held in tenancy by
entirety.
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2. Chicago Daily Law Bulletin - What assets can a creditor attach?
http://www.chicagolawbulletin.com/Articles/2015/07/22/Paul-Porvaznik-forum-7-22-15.aspx[7/22/2015 6:03:04 PM]
It’s difficult to prove a debtor’s subjective intent to impede a
creditor (a UFTA Section 5 claim) so most UFTA claims are
brought under UFTA Section 6: the transfer caused the debtor’s
insolvency.
The appeals court found the defendant and his wife owned the
home in tenancy by entirety at the time they transferred the
home to the trust. Because of this, the UFTA didn’t apply to the
transfer.
An interest in tenant-by-the-entirety property cannot be
fraudulently transferred against a creditor of only one of the
tenants.
Then, the court cited Illinois’ post-judgment statute, which
dictates that real property held in tenancy by the entirety is not
liable to be sold upon judgment entered against only one of the
tenants (735 ILCS 5/12-112).
The court did uphold the trial court’s turnover order involving
the defendant’s investment account funds. Under UFTA Section 6
— which governs pre-transfer claims — a creditor must show by
a preponderance of the evidence that (1) its claim arose before
the transfer; (2) the debtor made the transfer without receiving
a reasonably equivalent value in exchange for the transferred
property; and (3) the debtor was insolvent at the time of the
transfer or was rendered insolvent as a result of it.
Here, the corporate borrower’s default in July 2009 immediately
triggered the defendant’s obligations under the guarantee. And
since the corporation’s default predated the defendant’s
transferring his bank account to the trust by two months, the
bank’s claim against the defendant arose before he transferred
the investment account to the trust.
The court also found that at the time the defendant transferred
the account, he was insolvent within the meaning of the UFTA.
The defendant’s financial statements revealed that the
guaranteed loan amount far exceeded the defendant’s total
assets. As a result, the plaintiff established all required elements
of a UFTA Section 6 constructive fraud claim.
Key lessons of this case include the following:
A judgment creditor can’t force the sale of debtor’s real
estate that’s held in tenancy by entirety property.
A UFTA claim applies to any right to payment, regardless
of whether the claim is liquidated (reduced to a fixed
numerical amount);.
The court’s UFTA insolvency calculus takes into account a
debtor’s contingent liabilities, not just its current ones.
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3. Chicago Daily Law Bulletin - What assets can a creditor attach?
http://www.chicagolawbulletin.com/Articles/2015/07/22/Paul-Porvaznik-forum-7-22-15.aspx[7/22/2015 6:03:04 PM]
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