A fraudulent transfer occurs when the debtor conveys title of his or her real or personal property to a third party with intent to hinder a creditor from collecting. Consequently, Florida’s Uniform Fraudulent Transfer Act (FUFTA) provides remedies for creditors against fraudulent transferees.
Avoidance of the Transfer: An avoidance of the transfer allows a creditor to avoid the transfer and seek recovery against the asset fraudulently transferred.
Attachment: Attachment is a legal process where the court designates specific property owned by the debtor to be transferred to the creditor, or sold for the benefit of the creditor. Typically, attachments prevent debtors from selling property until debtors pay their debts.
Injunction: A creditor can obtain a court-ordered injunction against the transferee for further transfers. An injunction is a court order that restrains an act. In this case, the restrained act would be making further transfers.
Execution: A writ of execution entitles the creditor to take steps to collect the judgment. Creditors use writs of execution to seize debtor’s assets. Furthermore, a creditor can execute against a third party is possession of the debtor’s property.
Choosing a Remedy
Creditors likely want to know whether they are able to choose the remedy available to them. In In re Davis, the court held that sections 726.108 and 726.109 give the creditor a choice of remedies. In re Davis, 403 B.R. 914, 920 (Fla. M.D. 2009). The court notes that a creditor can either avoid a transfer and seek recovery against the asset fraudulently transferred, or to receive a money judgment against the transferee. Id.
Furthermore, the question arises whether courts prefer avoidance of the transfer over monetary damages. There is a split in authority about whether courts prefer avoidance over monetary judgments; however, case law demonstrates that certain factual circumstances such as impracticability influence the court’s preference.
If you are a creditor and have questions regarding what remedies are available to you for recovery against a debtor, please contact us. We look forward to assisting you.