I am not licensed to practice law in Alabama. This is not legal advice. This is just my opinion about a statute that concerns the situation when people transfer assets out of their name in order to protect those assets from seizure by creditors.
Alabama Code Sections 8-9A-1 through 8-9A-12 are the Fraudulent Conveyance statutes. They deal with creditors being able to set aside transfers by the debtor, and reach assets the debtor has already given away or possibly sold.
Anyone thinking about “hiding assets” by selling or giving them to children, spouses, friends or relatives, should be aware of this statute.
Basically, there are statutes of limitations for several different types of transfers. Just because your transfer occurred in the recent past, and the statute of limitations has not yet run out, does not mean the creditor automatically wins. They still have to prove that the transfer was fraudulent, under the different code sections.
In a nutshell, a transfer is considered fraudulent if it was made with actual intent to defraud, hinder or delay creditors. The court is allowed to consider whether the party was in a lawsuit at the time or threatened with a lawsuit, whether they continued to have possession of the property after the supposed transfer, whether the transfer was of substantially all of the debtor’s assets, whether the transfer was concealed, and other such factors. Creditors in existence at the time of the transfer, and even FUTURE creditors, can claim a transfer was fraudulent under this section, and set it aside.
If a creditor sues under the “actual intent” statute, then transfers of real property have to be attacked within ten (10) years of the transfer, and for personal property they must be attacked within six (6) years of the transfer, or the statute of limitation will run out.
In addition, creditors can claim a transfer was fraudulent if it was made at a time when the debtor was insolvent AND the debtor received less than full value for the property. BUT, only creditors in existence at the time of the transfer can rely on this statute to try to set it aside. The statute of limitations under this section is four (4) years.
There are other statutory descriptions of fraudulent transfers. The ones above are the most common occurrences. You should review all of the Code sections yourself, and consult with an attorney if you are concerned about this area.
You can read the actual Code sections by clicking on the link below. In the left frame, click on Title 8. Then, when the right frame appears, click on Chapter 9A. You will then see all the sections, and can read them. http://alisondb.legislature.state.al.us/acas/CodeOfAlabama/1975/coatoc.htm
