Creditors are often suspicious of whether their debtors have assets which are being concealed. Searching for hidden assets is a powerful tool which judgment holders can use to obtain higher returns on their judgment instruments. Debtors attempt to conceal assets in many ways by a debtor, but a thorough investigation can discover these.

Fraudulent transfer

Using this strategy, a debtor transfers or title assets in the name of a relative or associate, believing that the “paper” ownership in another name demonstrates that the asset does not accrue to them. In some cases a debtor will create a corporation or other entity to hold assets for their use or ownership. An investigation can discover these assets by following a flow of funds to determine where the money came from which purchased them. If the money came from the debtor to acquire an asset for a third party, that is one red flag to investigate further. In high profile cases, assets can be discovered through observation or surveillance. A debtor seen driving an expensive car or one not listed on a disclosure form can be deposed to determine the ownership and origin.

Lifestyle laundering

A debtor can use an affluent lifestyle to conceal assets or income. Instead of hiding assets in the form of a tangible object such as a car or boat, some debtors will liquidate hidden cash or off-the-books-income over time by spending lavishly on vacations or entertainment. This will not show up on a balance sheet or credit report, but can also be discovered through observation.

Trigger records

The records of a debtor should always be inspected, no matter how small. A $50 charge to a debit card may seem insignificant on its face. However, many of these charges indicate a relation to a larger expense. We have seen examples of small charges at a jewelery store which turned out to be a repair bill for a $50,000 Rolex. In another case, a $80 check was paid to a company with a generic name. It turned out to be a catering company which delivered lunch to a marina where the debtors undisclosed vessel was berthed. Small expenses can also indicate the location where a person traveled to, or how much gas is used during a particular time. Clever debtors will pay cash for large purchases to hide them, but often revert to credit cards or checks for smaller items, which can trace back to larger assets or lifestyle indicators.

Bank accounts

It is a common misconception that bank accounts appear on a credit report. Some debtors know that a casual search of credit records or even financial statements will reveal bank accounts. Actually, a more detailed investigation is needed to locate bank or brokerage accounts. Investigators with specific knowledge of these methods are necessary.

Real estate

Asset concealment and fraud almost always has a real property component. Real estate may be the origin of the fraud, or the means to divest the funds. Some debtors believe that real estate owned is not discoverable if some method to conceal ownership is take. Vesting title in another name is the most common. Some will use a quit claim deed to move ownership to another person. Debtors often overlook the fact that their prior ownership and the quit claim deed itself can be found in public records using the grantor/grantee name index. Using title forensics an investigator can even locate incidences where a debtor appears on title documents but not listed in the name index. References to the debtor as a signature witness to a transaction, holder of a remainder interest or life estate, or even having contributed to the closing funds on a HUD settlement statement can indicate that the property can be looked at as an asset.

Judgment creditors can look beyond the apparent means of a debtor to have assets to collect from. Many methods of investigation are used to discover all types of assets which a debtor may have. The bottom line is that everyone has some assets, including a debtor. A professional investigation is a powerful tool in obtaining a settlement or garnishment of assets.