In some circumstances, fraudulent transfer law allows a creditor whose claim did not even exist at the time of the fraudulent transfer to set aside the fraudulent transfer. What if a Creditor’s Claim Against the Debtor Arises After the Debtor Made the Fraudulent Transfer? For Example, What if Someone (a Creditor) Delivers Goods or Provides Services to Someone and it is Later Discovered That, Because of a Transfer That Was Made Before the Goods or Services Were Supplied, the Party Who Received the Goods or Services (the Debtor) Cannot Pay for the Goods or Services? A "claim" includes any right to payment, even a right to payment that has not matured. A creditor is entitled to the protection and remedies provided in the Uniform Fraudulent Transfer Act if it had a "claim" against the debtor at the time the fraudulent transfer was made. A creditor can set aside a transfer as fraudulent even if, at the time the debtor made the transfer, that creditor had not reduced its claim to a judgment. If the Creditor did not Have a Judgment From a Court Against the Debtor at the Time the Debtor Made the Fraudulent Transfer, Does That Mean That the Creditor Cannot Challenge or Set Aside the Transfer as Being Fraudulent? Transfers made with actual intent to hinder, delay or defraud a creditor.Transfers made without the debtor receiving a "reasonably equivalent exchange" when the debtor’s assets were unreasonably small or when the debtor knew, or reasonably should have known, that it was about to incur debts it could not pay.Transfers made while the debtor was insolvent or that rendered the debtor insolvent.Generally, and broadly speaking, there are three categories of transfers that should be a red flag for a creditor or a creditor’s lawyer that a fraudulent transfer may have been made: The law regarding fraudulent transfers and conveyances is complex, and there are a countless number of factual scenarios which might be considered fraudulent transfers. In some fraudulent transfer cases, a creditor may even be able to collect the money it is owed from the person or entity to whom the creditor transferred the asset. Where, however, a creditor can prove that a transfer was "fraudulent" under Tennessee law, the creditor may well be able to set aside the transfer, and to collect against the transferred asset. Not every transfer of an asset by a debtor who knows that it owes a creditor or creditors is a fraudulent transfer. A "fraudulent transfer" can even result from a situation where the debtor does not transfer an asset, but where it grants a lien on the assets of the debtor to a particular creditor.įraudulent transfer law, which is embodied in Tennessee law in the "Uniform Fraudulent Transfer Act," is designed to help creditors collect lawful debts by providing remedies to creditors whose collection has been hindered by debtors who have transferred assets. A "fraudulent transfer" of an asset by someone in debt (a debtor) is a transfer that the law will set aside or void because it would be unfair to other creditors if that transfer was allowed to stand. ![]() Sometimes, parties who owe money, who have a judgment against them, or who know that a judgment against them is not far off, try to dispose of or to transfer assets that they want to shield from the reach of the impending collection efforts of their creditors. ![]() What is a Fraudulent Rransfer (Sometimes Referred to as a Fraudulent Conveyance)?
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