What is a fraudulent transfer?

A fraudulent transfer is a financial transaction in which someone moves or transfers property to another person or entity in order to avoid or reduce potential creditors’ rights. This typically occurs when a struggling debtor attempts to hide their assets or income from creditors and debt collectors. In California, fraudulent transfers are illegal under the California Uniform Fraudulent Transfer Act and punishable by civil and/or criminal penalties. Generally speaking, a fraudulent transfer can take many forms, including transferring funds to a relative, selling property for significantly less than its true value, transferring property to a shell company or trust, or exchanging property of equal or greater value while failing to disclose the transaction to creditors. A fraudulent transfer also occurs when a debtor makes payments to certain creditors while intentionally withholding payments from other creditors. In California, a creditor can sue the transferor for fraud and attempt to retrieve the property that was sold or given away. They can also sue the recipient of the transfer if the court finds that the fraud was intentional and the recipient knew or should have known that it was obtained through fraud. If the court finds that a fraudulent transfer has occurred, the creditor may be awarded damages for the actual loss sustained, which could include interest and attorney’s fees.

Related FAQs

What is a judgment lien?
What is a deficiency judgment?
What is a discharge order?
What is the meaning of “creditors’ rights litigation”?
What are the different strategies available to creditors to collect on debts?
What is the purpose of the UCC?
What is the meaning of “debtor”?
What is an allowance of claim?
What is a voidable transaction?
What is an unsecured creditor?

What is a fraudulent transfer?

Related FAQs

Related Blog Posts