In re Gallagher Bk 07-22720; Gordon v. Kinney AP 09-2003 (Judge Ninfo, 9/30/2009): Another ring case. The debtor filed bankruptcy in October 2007. Two and a half years earlier, she gave the engagement ring back to Mr. Kinney. The 2 1/2 years is significant because it takes the transfer out of the bankruptcy fraudulent transfer period (2 years) and also places the transfer before the increase in the New York homestead exemption from $10,000 to $50.000. To avoid a transfer, the trustee had the burden to prove the debtor was insolvent when the transfer took place. The trustee had thought that the judge had accepted this conclusion prior to trial, but the judge found that there was a clerical error, so that it appeared the debtor was ever-so-slightly solvent when the transfer was made. Solvency is determined by adding up all the debtor's unexempt assets and debts at the time of transfer. The decision includes a chart showing $183,704 in assets and $169,983 in debts. The decision does not explicitly say so, but the $183,704 in assets should have been reduced by $10,000, the debtor's homestead exemption (she apparently had about $45,000 in equity in her house.) As the trustee had not shown the debtor to be insolvent, the transfer was not considered to be fraudulent under New York law. Note that had the transfer taken place after August 2005, when the homestead exemption rose to $50,000, the debtor would have been insolvent and the transfer avoidable.