Section 6.3 Transfer of an Interest of the Debtor in Property

• Library: Bankruptcy Practice (2007 Ed. + 2015 Cum Supp)

A. (§6.3) Transfer of an Interest of the Debtor in Property

The Bankruptcy Code, 11 U.S.C. §§ 101 et seq., defines the term “transfer” broadly to include “each mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with” property or an interest in property. 11 U.S.C. § 101(54)(D); In re Bruening, 113 F.3d 838, 841 (8^th Cir. 1997). A transfer may be a payment of money, the conveyance of real or personal property, a voluntary grant of a security interest or lien, or an involuntary encumbrance by judgment, execution, or garnishment. A particular transaction may involve more than one transfer, and each transfer must be analyzed separately in determining whether it meets the requirements for avoidance under 11 U.S.C. § 547. See In re Willaert, 944 F.2d 463, 464–65 (8^th Cir. 1991) (that the later payoff of a mortgage may not be a preference does not preclude a finding that the granting of the mortgage was a preference).

A transfer does not occur unless an interest in property is affected. See In re Carmack, 94 B.R. 148, 151 (W.D. Mo. 1988) (Koger, B.J.) (creditor’s change of date of loan document to correct dating error not a transfer); Fairchild v. Lebanon Prod. Credit Ass’n, 31 B.R. 789, 794 (Bankr. S.D. Ohio 1983) (increase in value of collateral does not constitute a transfer). But see In re May, 310 B.R. 405 (Bankr. E.D.

Ark. 2004) (filing of a lis pendens, which operates to encumber property, may qualify as a transfer for preference purposes).

The phrase “interest of the debtor in property” is not defined, but has been interpreted to mean “that property that would have been part of the estate had it not been transferred before the commencement of bankruptcy proceedings,” and is coextensive with usage under 11 U.S.C. § 541. Begier v. IRS, 496 U.S. 53, 58–59 (1990). What constitutes a transfer and when it is complete is a matter of federal law, but the nature and extent of the debtor’s interest in property is determined under state or nonbankruptcy law. See Barnhill v. Johnson, 503 U.S. 393, 397–98 (1992); In re N.S. Garrott & Sons,
772 F.2d 462, 466 (8^th Cir. 1985); In re Howes, 165 B.R. 270, 271 (Bankr. E.D. Mo. 1994) (Barta, B.J.).

If the debtor has voluntarily titled property in another’s name, record title may control. In re Gregg’s Custom Vans, 122 B.R. 727, 728 (Bankr. W.D. Mo. 1991) (Koger, C.J.); In re B & B Enter., 69 B.R. 45 (Bankr. E.D. Mo. 1986) (McDonald, B.J.). But see In re Chambers,
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