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Fraudulent conveyance is a cause of action, typically brought by the trustee of the bankruptcy estate, against a debtor. The trustee has the ability to locate aside fraudulent transfers that wrongfully place the debtor’s assets outside of reach of creditors. Fraudulent conveyance is when a debtor transfers an asset to another person in order to place that asset outside of reach of creditors. This might happen in the condition of a Chapter 7, liquidation bankruptcy. In a Chapter 7 bankruptcy, a trustee is appointed to see that the debtor’s nonexempt assets are liquidated in a manner that would maximize the giveback to creditors. A fraudulent conveyance would occur if a debtor were to transfer a nonexempt asset to a third party so that asset would not be sold, or liquidated, as part of the bankruptcy estate. If the trustee is successful in the fraudulent conveyance claim, the trustee can receive the property itself or the value of the property.
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