Legal Definitions - Fraudulent Transfer Act

The fraudulent transfer act is a set of laws created by states to protect creditors from debtors who transfer their property fraudulently to avoid paying their debts. These laws are also known as the Uniform Fraudulent Transfer Act or the Universal Voidable Transfers Act.

The act allows creditors to recover property that was fraudulently transferred by the debtor. The court will examine whether the debtor intended to defraud their creditors or if the transaction was made without sufficient consideration.

For example, if a debtor sells their property to a friend or family member for a very low price to avoid paying their debts, it could be considered a fraudulent transfer. Another example is if a debtor gifts their property to someone to avoid paying their debts.

The fraudulent transfer act is important because it protects creditors from debtors who try to avoid paying their debts by transferring their property.