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What can you do if a debtor makes a fraudulent transfer?

| Jun 17, 2021 | collections

Someone that owes you money may be willing to go to extraordinary lengths to avoid paying you, despite the fact they have sufficient funds to do so. One tactic they might use: Transfering money or assets to a place where they think it is safe.

Florida’s Uniform Fraudulent Transfer Act could help you recover money a debtor owes you if they tried to move their assets out of your reach.

What do you need to prove to use the Uniform Fraudulent Transfer Act?

To bring an action under this piece of legislation, you need to show a few things:

  • The person owes you money
  • They made the transfer with the intent to “hinder, delay or defraud” you
  • They could have used the assets they transferred to pay you instead

It does not mean a debtor cannot sell or transfer anything. They can, as long as they receive an appropriate amount in return. For instance, they sell a piece of land and receive the correct market value. That is not a fraud. If, however, the market value of the land is $1 million, and they sell it to a friend for $200,000, that might be a fraud. You could argue they are trying to hide $800,000, which their friend could later return to them.

If you can prove the transfer was fraudulent, a court may order the transfer to be reversed, meaning the property would belong to your debtor once more, allowing you to collect against it.

Collecting the money a debtor owes you can be challenging when they are trying their best to avoid paying. An understanding of the relevant laws can help you find the most suitable option to recover your money.