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Pursuing a debt after a fraudulent conveyance

On Behalf of | Feb 22, 2022 | Commercial Debt Collection

When a company that owes you money tries to hide its assets, it can be quite frustrating. You should know that you have options for locating and collecting that money. At Law Offices of Alan M. Cohen & Associates LLC, our attorneys have nearly 50 years of combined legal experience peeling back the layers of a company’s transactions to find fraudulent conveyances that reveal a debtor’s hidden assets.

What is a fraudulent conveyance?

Under Massachusetts law, a debtor makes a fraudulent conveyance when they transfer money or an asset for the purpose of avoiding payment of the debt. A common example is transferring title to an asset to a family member. On paper, it may appear that the debtor no longer owns that property, but in reality, they still control it. The goal is to move the asset outside of the creditor’s reach.

What can you do if this happens to you?

You may still attempt to attach the transferred property to the debt, either before or after the court issues a judgment. You must show that the transfer was a sham intended to defraud you and not a legitimate payment or exchange for value. Timing is key in these situations. When a debtor waits until a creditor is about to seize an asset to gift it to a friend or relative, the court will likely treat the transfer as suspect. The court will look at other factors, as well, such as:

  • Whether the debtor still has control over the property
  • Whether the debtor tried to hide the conveyance
  • The relationship the debtor has to the transferee
  • Whether the debtor received compensation for the transfer that matched its value

These are just a few of the many factors a court will consider under the law.

If the court rules in your favor, it may void the transaction completely. The law has defined rules for how and when a transaction may be voided and when the transferee could become liable for the debt. If your case is not appropriate for voiding the transaction, the court will find other ways to provide satisfaction.

You must act fast

Fraudulent conveyance actions have a statute of limitation of four years from the time you knew or should have known about the fraudulent transfer. If you suspect such an action by one of your customers, you should not wait to pursue an action against them. The experienced commercial collections attorneys at Law Offices of Alan M. Cohen & Associates LLC have the knowledge and ability to follow up on these claims and pursue a judgment in your favor. Contact us to schedule an appointment to learn more by calling 508-763-6604 or reaching out online.