The Ohio Uniform Fraudulent Transfer Act allows creditors to file claims to void the transfer of property from debtors to third parties. The statute of limitations requires filing a claim within four years of a transaction. If, after the SOL ends, you find that a debtor engaged in fraud, you may file your claim within one year of your discovery.
Creditors may assert fraudulent transfer claims when debtors file bankruptcy petitions. Under the U.S. Bankruptcy Code, fraudulent conveyances include selling property for less than its fair market value. Transferring an asset to a friend or relative may also classify as voidable when a debtor intends to retrieve it in the future.
Filing a fraudulent transfer claim
Fraudulent transfer claims require reasonable proof that a debtor intended to defraud a creditor. The Ohio Laws and Administrative Rules website notes that exchanging property without receiving its reasonably equivalent value may qualify as fraud. Debtors may have liquidated certain properties to show creditors they do not own assets.
When companies file for bankruptcy, creditors claiming fraud must show property transferred to an insider within two years before debtors filed their petitions. Cornell Law School’s Legal Information Institute explains that creditors may also attempt to void any transfer of assets an individual debtor made to a self-settled trust within 10 years before a bankruptcy filing.
Showing that a transfer reflects fraudulent intent
Judges generally scrutinize debtors’ intentions for their transfers. As noted by the American Bankers Association, pending lawsuits and transactions between friends or relatives may back up creditors’ claims of fraud. Secured lenders, for example, may show the court a public record of a debtor’s sale to a relative for a “discount” price.
Creditors have the right to protect their interests. When a debtor attempts to fraudulently evade settling an unpaid liability, creditors may turn to the courts to enforce payment.