fraudulent transfer

fraudulent transfer
In a bankruptcy case, a transfer of property to another for less than the property's value for the purpose of hiding the property from the bankruptcy trustee — for instance, when a debtor signs a car over to a relative to keep it out of the bankruptcy estate. Fraudulently transferred property can be recovered and sold by the trustee for the benefit of the creditors.
Category: Bankruptcy, Foreclosure & Debt → Bankruptcy
Category: Bankruptcy, Foreclosure & Debt → Foreclosure

Nolo’s Plain-English Law Dictionary. . 2009.

fraudulent transfer
USA
fraudulent conveyance, Also known as fraudulent transfer.
A transfer of a debtor's property made within two years before the filing of the bankruptcy petition (or other time limit set by state law) for which the debtor received little or no consideration while the debtor was (or was rendered) insolvent. Fraudulent conveyances also include transfers made with actual intent to hinder, delay, or defraud creditors. In this context, fraudulent does not refer to a criminal fraud, but rather means only that the transfer has placed the assets out of the reach of creditors. Fraudulent conveyances may be reversed by the bankruptcy court. This is a major concern of lenders who do not want payments from the borrower or a guarantor to be rescinded.
For further information, see Practice Notes, Fraudulent Conveyances in Bankruptcy: Overview (www.practicallaw.com/4-382-1268) and Fraudulent Conveyances: Issues and Strategies for Lenders and Private Equity Sponsors (www.practicallaw.com/8-382-2478).

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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