Some debtors are not willing to give up assets to debt collectors. These debtors may actively hinder a collector’s efforts to locate and collect assets to resolve repayment obligations. There are several lawful ways debtors can safeguard assets from collections when done properly. This can include, for example, placing assets in an irrevocable or asset protection trust, creating a limited liability company (LLC) or setting up a retirement plan.
However, a debtor may have illegally hid their assets from a collector. When a debtor is unwilling to resolve debt obligations, a collector may have to take extra measures to locate assets. It can help to know some ways debtors hide assets. There are a few ways this can happen. Here is what you should know:
Is a debtor suddenly missing assets?
A common way debtors hide assets is through fraudulent conveyance. Fraudulent conveyance is an attempt to defer or defraud creditors by transferring assets to another party, such as a friend or relative, which puts these assets out of reach from collectors. A court can review the details of a property transfer to determine whether it was lawful or an act to avoid collection. If the court believes that a debtor did commit fraudulent conveyance, then they can have the person holding the assets transfer it to the creditor.
Another way debtors may commit fraudulent conveyance is by using an offshore account. A debtor may also attempt to make an offshore trust for their own benefit. Offshore banking and trusts can make it difficult but not impossible for collectors to locate and collect assets that are located outside the country.
Understanding how a debtor may be hiding assets can help collectors take action. It can also help to reach out for legal help to learn more about debt collection.