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What is a fraudulent transfer?

Your Florida business depends on people paying you what they owe. Some individuals do not respect the responsibility they have to pay their debts, and in some cases, they may take steps to defraud you of the money that should be yours. 

According to the Florida Statutes, a person is transferring an asset if he or she parts with it by leasing or releasing it, creating an encumbrance or using it to pay someone. It could be a conditional action, where the person expects to get the asset back, or it could be permanent. Whether the person is getting rid of the asset to get out of paying you, or another creditor has seized the person's asset, it may be a fraudulent transfer.

Intent is important, according to statute 726.105(1)(a). A judge may consider the following factors when determining whether there was intent to defraud you:

  • The debtor concealed the transfer
  • The debtor gave the asset to a friend or family member, or to some other insider
  • The debtor transferred ownership of the asset to someone else┬ábut kept ownership or control of it
  • You sued or threatened to sue the debtor before he or she made the transfer
  • The debtor transferred assets and became insolvent soon after incurring the debt to you
  • The debtor disappears

Even if there is no actual intent to avoid paying you, but the debtor knows that by taking on another financial obligation, he or she puts the ability to pay your debt in jeopardy, that could also be a fraudulent action.

Other factors exist that may affect whether a debtor's transfer of assets is illegal. Therefore, this general information should not be interpreted as legal advice.

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