Creditors often spend months or even years trying to collect money rightfully owed to them. But what happens when a debtor suddenly transfers property to a friend, family member, or business partner right before or during a collection attempt? If the move was made to shield assets from creditors, it could be considered a fraudulent transfer, and you may have legal options to reverse it.
In South Dakota, creditors are protected under the Uniform Fraudulent Transfer Act (UFTA), which allows them to challenge transfers made with the intent to hinder, delay, or defraud. If successful, you may be able to recover the asset itself or its value, even if it’s now in someone else’s hands.
A fraudulent transfer occurs when a debtor moves assets in an attempt to avoid creditors or legal judgments. This can include giving away property, selling something far below market value, or shifting ownership to a family member, all while knowing a creditor is trying to collect.
Under South Dakota law, there are two main types of fraudulent transfers:
Even if there’s no “smoking gun” showing that the debtor wanted to dodge a debt, a court can still deem a transfer fraudulent based on timing, the relationship between parties, or suspicious terms of the deal.
Fraudulent transfers don’t always involve dramatic asset dumps. They often appear as ordinary transactions, but with telling details. Courts will consider several “badges of fraud” when evaluating whether a transfer was legitimate or designed to cheat creditors:
If several of these signs are present, a court is more likely to view the transfer as fraudulent and allow the creditor to take action.
If you suspect a debtor has transferred assets improperly, South Dakota law gives you several remedies. With the help of a creditor’s rights attorney, you can file a claim to:
The UFTA gives courts broad power to help creditors recover what they’re owed, but it’s important to act quickly. There are deadlines (statutes of limitations) for bringing a claim, usually within four years of the transfer or within one year of when the transfer was discovered (or reasonably should have been discovered).
Successfully challenging a fraudulent transfer requires strong evidence and a clear legal strategy. You’ll need to show that the transfer meets one or more criteria under South Dakota’s UFTA and that the debtor was attempting to avoid a valid debt.
This might include:
Because these cases often involve insider relationships or obscure financial trails, working with a knowledgeable creditor’s rights attorney is crucial. At Ogborn Mihm Quaintance, we know how to uncover hidden asset transfers and build solid cases on behalf of creditors.
While you can’t always prevent a debtor from acting in bad faith, there are steps you can take to protect your rights from the outset of the lending or contract relationship:
Early action gives you a better chance of freezing or recovering assets before they disappear or are transferred to third parties.
Fraudulent transfers are frustrating, but they don’t have to leave you empty-handed. If you suspect that a debtor is trying to avoid payment by moving or hiding assets, legal remedies are available to hold them accountable and recover what you’re owed.
Contact us today to speak with a creditor’s rights attorney in Sioux Falls. We’ll help you evaluate the transfer, assess your options, and take swift action to protect your interests.
