Debtors sometimes claim they can’t pay their debts, simply because they don’t want to have to make adjustments to their current lifestyle. In some cases, they may hide assets in an attempt to avoid having to liquidate those to satisfy the debts.
When assets are hidden, creditors may need to find ways to unearth those assets. This is particularly common in higher value cases. Determining how to find hidden assets isn’t always easy, but creditors have several options available.
Using discovery tools in litigation
A creditor has the option of filing a lawsuit. If they have done that already or if there’s already a judgment in place, they can use the legal discovery as a way to compel the debtor to disclose financial information. Some options they may use include:
- Interrogatories: Written questions the debtor must answer under oath.
- Requests for production: Demands for bank records, tax returns, or business documents.
- Depositions: In-person questioning under oath, which can help clarify suspicious financial activity.
Accurate information must be provided in these or the individual can face further action from the court.
Subpoenaing third parties
Creditors can issue subpoenas to employers, financial institutions and other third parties to determine the state of an individual’s finances. This may reveal sources of income, bank account balances or property titles.
Hiring a forensic accountant or investigator
In complex cases, a forensic accountant or investigator may be necessary. These professionals can use various tools to trace asset movement and expose discrepancies. In some cases, an investigator may show that the debtor has assets held in someone else’s name or that they’re funneling assets through a business.
Finding assets is important for any creditor who needs to collect on a debt. Finding legal methods to do this can help to keep the creditor’s interests protected.