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Setting Aside Fraudulent Transfers to Collect Money You Are Due

When someone who owes you money frustrates your efforts to collect by suddenly becoming cash poor, they may have committed a fraudulent transfer. This occurs when a debtor moves non-exempt assets to another person or entity to shield them from legitimate creditors. Fortunately, a remedy exists.

Illinois’ Uniform Fraudulent Transfer Act (IUFTA) lets creditors file a lawsuit in Illinois state court to challenge such transfers. If it finds the transfer fraudulent, the court may “unwind” it, causing the money or other property to be seized and to revert in ownership so the creditor can use it to satisfy debt. The court may also enter a money judgment against the recipient of the fraudulently transferred property.

Fraud may be involved when a debtor:

  • Makes a transfer that caused him or her to become insolvent
  • Makes a recent conveyance to a trust
  • Sells property for less than its fair market value
  • Transfers ownership of property to another person but keeps using the property as if it was his or her own
  • Gives large gifts to relatives
  • Pays off a large, pre-existing debt to a relative or close acquaintance

The IUFTA’s broad language includes many types of transfers that debtors can use to divest themselves of property in order to defraud creditors. The statute identifies two basic types of fraudulent transfers. One is a transfer made “with actual intent to hinder, delay, or defraud any creditor of the debtor.” The other is a transfer made “without receiving a reasonably equivalent value in exchange for the transfer or obligation” if certain other criteria are met.

To prove a claim under the IUFTA, a creditor must show that:

  • An claim exists, such as one arising from a loan, unpaid compensation or a court judgment.
  • The debtor gave something of value to a third party.
  • The recipient of the property was an insider, meaning they had a close relationship with the debtor.
  • The debtor did not get fair value in exchange for the transferred assets.
  • The transaction occurred while money was owed to a creditor, or the debtor anticipated owing money in the foreseeable future.
  • The transfer was made under circumstances showing that the transfer was made to frustrate collection of the debt.

If you are a creditor encountering difficulty collecting a judgment because the debtor allegedly lacks the funds to pay it, a fraudulent transfer litigation attorney can trace suspect transactions and bring a well-pleaded IUFTA lawsuit to enforce your rights.

At the Chicago law firm of Schwartz Law Group, LLC, we make it our mission to help you get paid what you are owed. Call us 312-436-1442 today or contact us online to schedule a consultation.

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