Can I legally spend down my assets after receiving a court summons from a creditor?

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Can I legally spend down my assets after receiving a court summons from a creditor?

Was injured serving in Iraq. Was medically discharged and could not work. Fought for Social Security Disability and VA Disability for two years. During the two year I lost everything trying to stay afloat; house, investments, wife, vehicles, furniture…(a country song!) Finally won my appeals and got back pay. With the money I paid off student loans and bought me a nice new SUV. No money left for creditors. Been on the run for years avoiding creditors. When they catch me and serve me a summons can I legally sell the SUV and use the money to go on a long cruise leaving them nothing to take?

Asked on August 30, 2011 Tennessee

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Until and unless there is a court order (e.g. an injunction) restricting your ability to sell assets or spend money, you may do this. If and when there is some kind of order, then if you violate it, you could be penalized by the court--potentially with imprisonment for contempt of court, in egregious cases.

If you transfer assets in a fraudulent transaction (e.g. "sell" your for far below market value to a relative, who will still let you use it), that particular transaction can potentially be set aside, so to avoid future legal entanglements, engage only in legitimate, fair market value, "arms length" transactions.

Be aware that even ifyou can't pay a judgment (assuming creditors sue you and win) immediatley, they can try to enforce that judgment for many years, so if you later come into money, it will be at risk. Also your credit will be affected by the default on the judgment.


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