In U.S. v. Wilhite, a federal court addressed a debtor's argument that the U.S. government's fraudulent transfer was time-barred under Colorado law, and that Colorado law restricted the U.S. government to a charging order against the debtor's interests in an LLC. The Court held that a criminal restitution award was in the nature of a tax, and that contrary state law simply does not apply to actions by the U.S. government to collect a tax. The same is increasingly true of FDCPA cases, where the courts have been looking completely past state law to allow the U.S. government to collect on assets that might have been otherwise protected. A problem for asset protection planners is not so much about the FDCPA, however, as it is about managing client expectations. Not knowing these types of creditors even exist, they can't effectively explain to clients the significant limitations of their own planning.

Source: Forbes November 24, 2017 02:26 UTC