Fraudulent Conveyance: What You Need to Know About Legal Transfers
Definition & meaning
A fraudulent conveyance refers to the transfer of property made with the intent to delay or defraud a known creditor. If a creditor can demonstrate that the transfer was made with fraudulent intent, they may file a lawsuit to have the transfer invalidated. However, if the transfer occurred without the debtor's knowledge of the claim, before the debt was due, or for legitimate business reasons, the creditor may not succeed in overturning the conveyance.
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This term is primarily used in civil law, particularly in cases involving debt collection and bankruptcy. It can arise in various contexts, including family law and business transactions. Creditors may seek to challenge a transfer of assets if they believe it was intended to evade their claims. Users can find legal forms and templates on US Legal Forms to assist them in navigating these situations effectively.
Key Legal Elements
Real-World Examples
Here are a couple of examples of abatement:
Example 1: A business owner transfers ownership of their property to a family member just before a lawsuit is filed against them by a creditor. This transfer may be considered a fraudulent conveyance if the intent to evade the creditor can be proven.
Example 2: A debtor sells their car for a significantly lower price to a friend right before declaring bankruptcy. If the sale was not conducted in the ordinary course of business, it could be challenged as a fraudulent conveyance. (hypothetical example)
State-by-State Differences
Examples of state differences (not exhaustive):
State
Key Differences
California
Requires proof of intent to defraud and may have specific exemptions.
New York
Has specific statutes outlining fraudulent conveyances with detailed criteria.
Texas
Allows for certain transfers that may not be considered fraudulent if made in good faith.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with Related Terms
Term
Definition
Key Differences
Fraudulent Conveyance
Transfer of property to defraud creditors.
Focuses on intent and creditor claims.
Preferential Transfer
Transfer that favors one creditor over others.
Does not necessarily involve fraud; focuses on fairness among creditors.
Voidable Transaction
Transaction that can be invalidated due to certain conditions.
Broader category that includes fraudulent and preferential transfers.
Common Misunderstandings
What to Do If This Term Applies to You
If you suspect a transfer may be fraudulent, consider the following steps:
Gather evidence of the transfer and any related documentation.
Consult with a legal professional to assess your case and options.
Explore legal forms on US Legal Forms to assist with filing a claim or lawsuit if necessary.
Complex situations may require professional legal assistance to navigate effectively.
Quick Facts
Attribute
Details
Typical Fees
Varies by attorney and complexity of the case.
Jurisdiction
State-specific laws apply.
Possible Penalties
Reversal of the transfer, monetary damages.
Key Takeaways
FAQs
A fraudulent conveyance is a transfer of property made with the intent to delay or defraud creditors.
You must demonstrate that the transfer was made with fraudulent intent, often requiring evidence of the debtor's knowledge of creditor claims.
No, only those made with the intent to defraud creditors can be considered fraudulent conveyances.
Gather evidence and consult a legal professional to explore your options.
Yes, US Legal Forms provides templates that can help you file a claim or lawsuit regarding fraudulent conveyances.
