The United States Supreme Court has held that the badges of fraud boil down to: “proof by a creditor of certain objective facts (for example, a transfer to a close relative, a secret transfer, a transfer of title without transfer of possession, or grossly inadequate consideration) would raise a rebuttable presumption of actual fraudulent intent.” BFP v. The facts to be weighed by the court include whether certain badges of fraud are present. Thus, when ruling on the presence of actual fraud, the court “focus on the intent of the transferor” and whether an actual fraud was perpetrated “is a question of fact determined by a preponderance of the evidence.” Wolkowitz v. No debtor in his right mind would admit to such fraudulent intent. If the debtor made a transfer with “actual intent to hinder, delay, or defraud” any one of it’s creditors, then the transfer may be said to be actual fraud and thus voidable by the bankruptcy trustee. Actual Fraudulent Transfer (Voidable Conveyance)Īctual fraud gets into the debtor’s mind when he is making a fraudulent transfer. Constructive FraudĪ trustee can avoid transfers undertaken to actually defraud creditors or if the action is deemed constructively fraudulent. ![]() How to Prove & Avoid a Fraudulent Conveyance – Actual Fraud vs. The tips and tricks of how a bankruptcy trustee avoids these allegedly fraudulent conveyances and how to defend them are below as explained by an experienced bankruptcy attorney in California. ![]() Not so fast, debtors! The bankruptcy code provides protection for trustees acting on behalf of all creditors by allowing the bankruptcy trustee to avoid certain transfers which indicate fraud under 11 U.S.C. A debtor may think transferring property out of his estate will shield the property from his creditors. Indeed, sometimes debtors who realize they will be filing bankruptcy think it is best to transfer their property to a friend or family member for less than reasonably equivalent value, which is known as a fraudulent transfer. ![]() Among those rights is the ability to set aside transfers for less than fair market value. When a debtor filed a bankruptcy, an estate is created composed of all of the debtor’s rights in property. Contact an Experienced Bankruptcy Fraudulent Transfer Attorney in California What is a Fraudulent Conveyance / Fraudulent Transfer?
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