Thorough Private Investigations Uncover How Debtors Hide Their Assets

Having trouble collecting from people who owe you money? Sometimes, individuals or companies who wish to withhold payment for debt or an obligation will attempt to hide their assets from those who may have legal interest in them. Hidden assets are commonly encountered in divorce suits, but these may also be factors in cases of debtors who wish to avoid or delay their payments.

Hidden assets are legally defined as values which are purposely secreted from disclosure to another; or, in the business setting, assets that are not properly disclosed in normal accounting records, particularly balance sheets. These assets could be anything from stocks and bonds to bank accounts; and at times, uncovering them could be very difficult to accomplish. This often requires thorough and intensive private investigations, which could delve into various possible means of hiding assets.

Fraudulent transfers

Debtors—companies or individuals—could hide assets by transferring them to family members or friends, or to offshore accounts, prior to judgment. This prevents creditors from gaining possession of or collecting from these assets. If it can be proven in court that such a transfer has been made prior to judgment, the assets could be re-transferred to the debtor and be made available for collection. The most common way of proving a fraudulent transfer is by checking debtor’s transactions to see if any large payment has been made by the debtor to another individual or entity before judgment.

Financial statements

Unearthing hidden assets may involve looking at debtors’ financial activities through transactions reflected on financial statements, such as credit card statements and bank account statements. Unusual or increased activity can signal a fraudulent transfer of assets. An uncharacteristic withdrawal, for example, might mean that the debtor is moving cash to a hidden account.

Credit reports may also provide clues to hidden assets, through information on credit or other accounts that are unknown to creditors or other interested parties.

The consequences

You, as the creditor, should be vigilant in making sure that debtors are being upfront about their assets. Any person or company found guilty of fraudulent transfers could be criminally or civilly charged with fraud. Uncovering hidden assets and fraudulent transfers may be necessary to ensure you rightfully collect from an errant debtor. Experienced private detectives and investigators like those at Phenix Investigations, Inc. offer valuable service in this regard, and will help go after those who try to avoid their obligations by skirting the law.