Final answer:
The statement is true. Fraudulent transfers can be scrutinized and potentially reversed by a bankruptcy trustee if they occur within two years before filing for bankruptcy, as per 11 U.S.C. § 548(a)(1) of the United States Bankruptcy Code.
Step-by-step explanation:
The statement that fraudulent transfers can occur up to 2 years before the debtor files for bankruptcy is True. Under the United States Bankruptcy Code, specifically 11 U.S.C. § 548(a)(1), a transfer made or obligation incurred by a debtor is fraudulent as to a creditor if made within two years before the date of the filing of the petition, without the debtor receiving reasonably equivalent value in exchange for the transfer or obligation.
This is intended to prevent a debtor from diminishing the value of the bankruptcy estate by transferring assets to others that creditors might otherwise use to satisfy the debtor's obligations.
For instance, if a debtor transfers property to a family member for less than its fair market value, this could be seen as a fraudulent transfer designed to keep assets away from creditors. The bankruptcy trustee has the authority to reverse such transfers or obligations that fall within this two-year timeframe to ensure creditors are treated fairly and equitably.
Consequently, it's important for debtors to understand their actions pre-bankruptcy can be scrutinized and possibly undone to protect creditor rights.