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What is fraudulent conveyance? 

On Behalf of | Jun 3, 2024 | White-Collar Crimes |

There are many different kinds of fraud. Some forms of fraud are less obvious and can involve more than one person, such as pyramid schemes and bank fraud. Other forms of fraud can involve individuals, such as mortgage fraud. One kind of fraud that can happen to anyone is fraudulent conveyance. 

Fraudulent conveyance is a form of actual fraud that involves the intentional and illegal transfer of assets prior to a bankruptcy proceeding. Here is what you should know: 

How does fraudulent conveyance happen?

Also known as “fraudulent transfer,” this can happen in several different ways. One common tactic is to transfer property to family friends or business associates shortly before filing bankruptcy to keep the assets from being used to repay any debts. Another is transferring property into the name of a recently created business entity — that the debtor actually controls.

Another way a debtor may circumvent paying a creditor is by putting a property in someone else’s name. The property may be “sold” at a low price, below market value, to someone close to the debtor. The debtor may then “buy” back the property when they believe they have avoided the creditor.

Creditors have ways to recover assets from debtors if they suspect fraudulent conveyance. The creditor may ask a bankruptcy court to retrieve the assets from whoever is holding them. 

If you’ve been accused of fraudulent conveyance, it can not only put your bankruptcy proceedings in danger, but you could face criminal charges. Seeking legal guidance is wise.