What must a creditor prove to win a fraudulent transfer case?
There are two types of fraudulent transfers: 1) Fraud in fact, or actual fraud, and 2) Fraud in law, or
constructive fraud. Actual fraud is when you actually
intended to hinder, delay or defraud your creditor. This, of course, is usually difficult to prove because the creditor must prove your state of mind – unless you admit to fraudulent intent. However, courts can infer fraudulent intent from
badges of fraud such as transfers to close family members or friends, secretive transfers, transfers for less than fair value, situations when the debtor continued to use or possess the property after the transfer, concealing assets, transfers made after the debtor incurred a large debt or anticipated a lawsuit, and transfers that rendered the debtor unable to pay the debt. It's important to understand that a fraudulent transfer is not the same as fraud. Fraudulent transfers should more appropriately be called 'voidable transfers'.