Someone in significant debt could run the risk of losing valuable property such as real estate to creditors. However, the debtor might attempt to prevent a creditor from seizing the property by using a fraudulent conveyance to transfer it to another party.
Per Sfgate, here are three possible signs that a property owner is attempting this form of property transfer.
The timing of the transfer
Many fraudulent conveyances occur close to a bankruptcy. Before filing for bankruptcy, the property owner will transfer the property title to someone else. This allows the owner to not list the property when listing assets during the bankruptcy process.
The nature of the transfer
A property owner will usually convey the real estate to a family member or trusted friend for a very low price. Usually, the amount is far below fair market value. The owner might even offer the property as a donation to another person.
Continual use of the property
Though no longer the owner, the debtor may still use the property as before. The debtor may not even pay rent to the new owner to stay on the property. The intention of the old owner is usually to wait until the bankruptcy is over to take the title back from the other party.
Signs of this type of property transfer may motivate a creditor to take legal action. Under the state’s Uniform Voidable Transactions Act, a creditor can ask a judge to void a fraudulent conveyance, provided it happens within a certain time frame. A court can terminate the title transfer and allow the creditor to take possession of the property.
