One aspect of business that often gets overlooked until problems arise involves transactions. Extending credit to your customers puts you at risk of non-payment problems, especially if they engage in unlawful or unethical tactics like fraudulent transfers. Fortunately, the law allows businesses to pursue litigation against debtors/customers who do not uphold their commitments.

Nonpayment concerns are common in the business world, regardless of industry. To minimize the loss and risk of litigation, review the following information on fraudulent conveyance transfers.

Fraudulent transfers parameters

Most business transactions are made with good intentions. However, intentions and circumstances can impede some debtors or customers’ ability to pay or honor their financial obligation to your organization. The Texas Uniform Fraudulent Transfer Act 

classifies transactions as transfers of ownership through lease, currency, lien or other legal claims.

  • Transactions that occur fraudulently and are subject to legal recourse include:
  • Transfers that involve payment delays or discredit the business owner/creditor
  • The debtor made transactions with the intent to defraud the business
  • Debtor hide assets to avoid liability
  • Debtor insolvency or files for bankruptcy
  • Debtor transfers less than fair/reasonable value to the creditor
  • Debtor intended to rack up debts without intent to repay

There are other parameters that fall under fraudulent conveyance. Many TUFTA business litigation claims involve multiple violations.

Bear in mind the courts use a variety of factors in business litigation cases to determine proof of TUFTA violations. Due to the complex nature of the law and to prevent the courts from becoming overwhelmed, business owners who believe they are dealing with TUFTA violations must file their claims within four years of the date of transfer.