If you are trying to collect on a judgment, part of your asset search should concentrate on looking for hidden assets. Assets that are not readily available, have been undisclosed, or have otherwise been purposely hidden from you could be difficult or even impossible to collect. A debtor’s ability to hide assets can be valuable in reducing the amount of collected cash. Hidden assets can also complicate the process of locating non-cash assets, legally seizing and selling assets, and even serve as a barrier between collecting a judgment and receiving payment.
Hidden bank accounts
Bank accounts are the most common type of hidden asset. Not only will banking transactions reveal the locations of your debtor’s wealth, but they may also lead to other sources of hidden assets such as brokerage or investment accounts.
Antiques and artwork
Assets can be hidden in plain sight in the form of antiques and expensive artwork. Some people think that by spending the money, that wealth is unobtainable by the creditor. However, antiques and artwork can also be seized as assets just like a bank account.
A debtor may try to hide their assets in business interests or shell corporations. When assets are put into a corporation, it can be difficult to tie them to their actual owner. However, corporate records are not secret and can be accessed by the public through each state’s Secretary of State database.
Once you have access to corporate records, you can examine the registered agent, shareholders, and officers of the corporation. If you believe that a debtor is hiding assets in a company, it is important to thoroughly investigate the ownership of that company.
Check if your debtor has prepaid insurance policies. Did you know people can prepay and overpay on insurance policies? Common in divorce cases, individuals may prepay or overpay on policies like life insurance and vehicle insurance to later obtain a refund or simply prepay to avoid paying their judgment. Some insurance policies even have a cash surrender policy like in the case of life insurance. Check all of the insurance policies that your debtor has to ensure funds are not being deceptively allocated prematurely.
The rise of online banking and cryptocurrencies have made it easier than ever for debtors to hide their money. Even though the currency is digital, it is still considered an asset. A debtor may try to use the anonymity of blockchain in an attempt to hide their wealth. However, even though it may be tedious, these transactions can be linked back to the debtor.
Fake invoice payments
If you see invoice payments on a bank statement, verify the recipient of the payment. Some debtors will create fake invoices for companies that don’t exist. Instead of paying the “company”, the money goes straight into the debtor’s bank account disguised as an invoice payment.
Debtors may try to hide assets in the form of real estate. The debtor may transfer ownership of the real property to a relative or friend. It is necessary to review the documents recorded in the county records office where the property is located. In addition, sales of property within recent years should be reviewed. The property owner may have a mortgage, but it is possible that cash was paid for part of the purchase price and there are no liens on the property.
In many states, real estate tax records are available online. Reviewing this data will reveal who owns a particular piece of real estate, whether there are any mortgages, and who is responsible for paying the taxes.
Did you know that you can prepay on your taxes? It doesn’t sound desirable, but it is a way for debtors to prepay on their taxes so that their funds are in control of the IRS. If their funds are controlled by the IRS, they are not able to be seized or garnished.
A debtor can work with their employer, or secretly, to defer or delay their income. This way it seems like the debtor has significantly less income or even has a negative account balance. While their accounts are seemingly draining, they’re building up a balance with their employer to release at a later date. If you’re attempting to garnish someone’s wages, this is an extremely important place to look for hidden assets because garnishments only pertain to a certain amount of income.
Vehicles and yachts
Debtors constantly try to hide assets in vehicles and yachts because they’re movable and can literally be hidden. Debtors tend to hide them by transferring the vessel or vehicle titles to relatives or friends, filing false liens, or creating fraudulent ownership documents.
Family and friends
Knowing that they will likely be their creditor’s first choice for hiding assets, debtors often turn to their closest relatives, friends, or neighbors to help conceal their assets. This can include transferring property into someone else’s name, depositing money into a family member’s bank account, or taking out loans from relatives or friends.
There are a number of other hidden assets you can look for when conducting an asset search, and all avenues should be investigated when pursuing hidden assets. Finding hidden assets rely on the ability to analyze and comprehend patterns of a debtor’s transactions, so look for hidden assets prior to litigation to ensure your debtor isn’t concealing them from you. Once hidden assets are found, they cannot remain hidden forever.