Actual Intent to Defraud
Those particular facts and circumstances have been branded the “badges of fraud,” First let’s examine the circumstances under which the “actual intent to defraud” exists. Since “intent” is a state of mind, which is not easy for a creditor to prove, courts have inferred from the facts and circumstances of each particular case whether the intent to defraud existed in the mind of a debtor. meaning their presence is consistent with an actual intent to defraud. The existence of two or more of these factors would allow a judge or jury to conclude that the purpose of the transfer was to unlawfully escape the payment of debts.
Badges of Fraud
Court cases involving the “badges of fraud” are numerous. Here is a partial list:
- The transfer of assets of a family member or a close friend;
- The creation of a debt owed to a family member or a close friend;
- The concealment or non-disclosure of the fact that a transfer has occurred or a debt was incurred;
- A transfer occurring immediately before the transferor was sued or threatened with a suit;
- The disappearance of the transferor;
- The removal of assets;
- The transferor’s receipt of less than the true worth of the asset;
- A transfer occurring shortly before or after a substantial debt was incurred; and
- A transfer of assets to another creditor who then transfers the same assets to a person friendly to the original transferor.