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Fraudulent Conveyance in Bankruptcy Law

Fraudulent conveyance, often referred to as a fraudulent transfer, is the legal term used to describe an unfair transfer of assets relevant to a bankruptcy case. This blog post will discuss some important things you need to know about it.

What is the legal definition of fraudulent conveyance?

The legal definition of fraudulent conveyance requires two main elements. The first element requires an actual intent to hinder, delay, or defraud anyone to the disadvantage of the person receiving the property or any creditor. This is usually committed by transferring assets. The second element requires that there be unjust enrichment on the part of the defendant. Therefore, fraudulent conveyance is essentially an act that deprives someone who has a right to property.

Types of fraudulent transfer

There are different types of fraudulent transfers based on who is affected by it and how it affects them. In a bankruptcy situation, fraudulent conveyance occurs when a debtor transfers assets from one creditor to another creditor. This is most often done by transferring assets to a third person or an entity that's not part of the bankruptcy case. In this situation, the transfer was meant to hinder or delay subsequent creditors from collecting claims on the debtor's assets.

What Does the Civil Law State?

In a civil lawsuit, the fraudulent conveyance is similar to bankruptcy, except it does not involve a bankruptcy proceeding and can be decided by a judge or jury. A civil lawsuit can be a simple case against someone who wrongfully used property belonging to another person with actual fraudulent intent or can be more complexly structured to assign damages, punishment, or other equitable relief.

Different Lawsuits

There are two basic types of fraudulent conveyance lawsuits. The first type requires a creditor to show that there has been unjust enrichment to the benefit of the debtor. The second type requires point-in-time transfers of assets or other property. This type may be used in addition to the first type if the creditor cannot prove actual fraudulent intent on behalf of the debtor. The federal bankruptcy code will determine how to handle fraudulent conveyances in bankruptcy cases.

McLeskey Law Offices are a good option for Columbus locals, thanks to their experience in probate law and many other legal services. They are helping out their clients with probate law, property cases, and much more. Reach out to the business today if you seek a probate law or litigation lawyer.

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