Those facing escalating collection efforts may engage in aggressive avoidance. People quit jobs and move house to avoid collection efforts ranging from litigation to wage garnishment.
Other times, they may attempt to hide resources from creditors, possibly by making fraudulent transfers. In scenarios where creditors have reason to believe that transfers made to spouses, other family members or even trusts are fraudulent, it may be possible to ask the courts to set aside the transfer and allow continued collection activity.
What constitutes a fraudulent transfer?
People who have financial resources or valuable property typically control those resources. However, they cannot intentionally transfer ownership of resources to others to avoid collection activity.
Such conduct could constitute a fraudulent transfer, and the courts can potentially reverse the transfer. In fact, the courts can even potentially hold the recipient of those resources liable by allowing a creditor to name them as a defendant in a lawsuit.
Transfers that debtors initiate after taking on a debt or when facing collection activity could be fraudulent. There may also be reason to challenge transfers that involve property already subject to a court order or listed as potential collateral for a loan. Whether the debtor transferred their assets to another person or a trust, reversing the transfer or holding the recipient accountable could help the creditor recoup as much as possible, despite the debtor’s attempts to avoid financial responsibility.
When creditors have reason to believe that debtors have inappropriately transferred resources, they can potentially take legal action. Reviewing a debt itself, collection efforts and problematic transfers with a skilled legal team can help creditors explore their collection options and secure the maximum repayment possible.
