When businesses that are owed money attempt to collect on their debts, they can sometimes be hindered in their efforts by borrowers who actively do what they can to keep from being held accountable for their repayment obligations. Many simply ignore repeated requests – and, eventually, demands – for repayment. Others go so far as to hide their assets.
Hiding personal assets helps to ensure that should creditors secure a judgment, the assets in question remain protected from that judgment. Certainly, there are lawful ways to safeguard assets from collection, such as placing them in an irrevocable trust. These efforts are extreme – and result in significant consequences for the borrower – but they are lawful. However, hiding assets unlawfully remains a commonplace occurrence despite the possibility of lawful alternatives.
What to look for when a debtor’s assets seem to be missing
If your company is trying to collect on a debt and you suspect that a particular borrower may be hiding assets, know that they may be using one of these common – generally unlawful – strategies to facilitate their goal of escaping liability:
- Making false statements concerning what they do and do not own
- Presenting false “proof” of ownership or non-ownership of an asset
- Giving away assets to loved ones temporarily in an effort to claim that they no longer own them
- Paying someone or otherwise transferring ownership of an asset temporarily
- Destroying or devaluing an asset that could otherwise be used as repayment for a debt
- Withholding material information about an asset and/or ownership of it
Navigating the ins and outs of seeking repayment for a debt when a borrower is resistant to honoring their obligations can, as illustrated above, be a complex and frustrating undertaking. Know that your business can seek legal guidance at any point to receive support and personalized feedback about any particular debt collection situation in question.