FRAUDULENT CONVEYANCE

In debt and judgment collection cases, a defendant or judgment debtor may attempt to fraudulently conceal their or its assets by transferring them to an associate, family member, a related company, or other third parties to avoid paying the creditor. So, what should a creditor do in fraudulent conveyance cases?

What Are a Creditor’s Rights and Remedies When a Debtor Fraudulently Transfers Property or Assets To Avoid Paying A Debt Or Collection Of A Judgment?

Georgia adopted the Georgia Voidable Transactions Act, which follows by numerous states model statutes.

What does the Georgia Voidable Transactions Act cover?

The law applies to any “asset” of a debtor. In other words, the law’s use of the word asset or property can be anything that may be the subject of ownership.

Who does the Act protect?

A “Creditor” means a person who has a claim, regardless of when the person acquired the claim, together with any successors or assigns.

When is a Transfer Voidable?  

Under O.C.G.A. § 18-2-74, a transfer made by a debtor is voidable, if the debtor made the transfer:

1. With actual intent to hinder, delay, or defraud any creditor of the debtor; or
2. Without receiving something of equal value in exchange for the transfer or obligation, and the debtor:

Factors Considered When Determining Intent

When determining actual intent, the court may consider:

1. The transfer was made to an insider;
2. The judgment debtor retained possession or control of the transferred property after the transfer;
3. The transfer was concealed;
4. Before the transfer was made or debt was incurred, the debtor had been sued or threatened with suit;
5. The debtor fled;
6. The debtor removed or hid assets;
7. The defendant was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred; and
8. The transfer happened shortly before or after the debt was incurred.

When collecting from a debtor, one must determine what assets the debtor had before, during, and after litigation has started to monitor all transactions.

While all transfers will not be rendered void, if the evidence indicates that the transfer was intended to avoid paying a debt, the court may declare the transfer void.

Contact the judgment collection lawyer, Diwan Law, for a free case evaluation.