Legal Definitions - fraudulent conveyance

A fraudulent conveyance is when someone transfers ownership of their property to someone else in order to avoid paying their debts to a creditor. This is illegal and can be challenged in court by the creditor. It is considered fraudulent because the person who transferred the property did it with the intention of cheating their creditor.

• John owes $10,000 to his credit card company. He transfers ownership of his car to his brother so that the credit card company can't take it to pay off his debt. This is a fraudulent conveyance.
• Sarah is about to file for bankruptcy because she can't pay her bills. She gives her expensive jewelry to her friend so that the bankruptcy court won't take it to pay off her debts. This is a fraudulent conveyance.

These examples illustrate how someone might try to cheat their creditors by transferring ownership of their property to someone else. This is illegal and can have serious consequences.