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Protecting Your Assets

Fraudulent Conveyance

Fraudulent conveyance is a transfer of money or property from a debtor to someone or something else when either: 1) the debtor intends to deliberately hide their assets from creditors, and/or 2) the debtor received less than a reasonably equivalent value in exchange for the transfer of property (such as selling your house to your brother for $1 to avoid a lien).

Each state has laws on the books that determine the timeframe during which a creditor can make a fraudulent conveyance claim. To be clear, fraudulent conveyance isn't a prohibition on asset protection, it just limits the timeframe between when you protected an asset and when a judgment was awarded. Usually the timeframe is 2 years, but you should check with a reputable source in your state to confirm the timeframe.

If a creditor alleges fraudulent conveyance, they would have to sue you in civil court and prove that you had intentionally moved money or property to avoid paying them. For reasons that are likely obvious to you by now, this hardly ever happens unless a bankruptcy court is involved.

For any attorneys that might be reading this, I am not suggesting that anyone commit fraudulent conveyance; readers should check the laws in their state and abide by them. However, people open up new bank accounts, quit their jobs, move or choose not to sell their homes every day. It is highly unlikely that a judgment creditor is going to pursue a fraudulent conveyance claim, let alone be successful in proving one.

Enough said.

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