If you are trying to collect on a judgment, conducting a hidden asset search can help locate property and other assets that have been undisclosed, have not been found in past asset searches, or have otherwise been purposefully hidden. 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.
What is an asset search?
An asset search is an investigation and a report of various types of records to determine a person’s or organization’s assets, including bank accounts, automobiles, property, businesses—even things like art, life insurance policies, trademarks, antiques, and patents.
All asset searches aim to uncover hidden assets, whether they’re purposefully hidden or accidentally. Unfortunately, most debtors don’t accidentally hide their assets.
Where do debtors hide assets?
A hidden asset search doesn’t just look at bank accounts, your investigator will conduct an in-depth analysis of your debtor’s records and create connections to reveal the debtor’s true wealth. Here are some of the top places where debtors will hide their assets:
#1: Hidden bank accounts
Bank accounts are the most common type of hidden asset. Banking transactions may show where a debtor has wealth, and can also lead to other sources of hidden assets, such as brokerage or investment accounts.
#2: Real estate
A debtor may try to hide assets by transferring ownership of a property to family members or friends. Reviewing the documents recorded in the county records office, as well as sales of property within recent years, can uncover who owns a particular piece of real estate and whether there are any mortgages. In many states, real estate tax records are available online.
#3: Corporate business interests
A debtor may try to hide assets in business interests or shell corporations. When assets are put into a corporation, it can be difficult to tie them to the actual owner. However, corporate records are not secret and can be accessed by the public through each state’s Secretary of State database. If you believe that a debtor is hiding assets in a company, it is important to investigate the company’s ownership thoroughly.
The rise of online banking and cryptocurrencies has made it easier than ever for debtors to hide their wealth. 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 conceal their financial transactions, but these transactions can be traced to the debtor via blockchain analysis.
#5: Settlement statement (HUD-1)
The settlement statement (HUD-1) form is part of a real estate transaction and notes all transactions related to the property. Additionally, the statement shows cash at settlement to or from the seller and the exact amount of money that the seller walks away with. Using this form can help put together the pieces of the debtor’s true status of wealth after the transaction.
#6: Conservation easement
According to the National Conservation Easement Database (NCED) “a conservation easement is a voluntary, legal agreement that permanently limits the use of the land in order to protect its conservation values”. A buyer of this agreement can keep this off of public records and can be overlooked on the debtor’s books. However, this method to hide assets is slowly becoming more common.
#7: Vehicles and vessels
In order to evade debt, debtors try to conceal assets in vehicles and vessels, as they are frequently moved and are difficult to locate. This can be done by transferring the vessel or vehicle titles to relatives or friends, filing false liens, or creating fraudulent ownership documents.
#8: Antiques and expensive artwork
Don’t be fooled into thinking assets can’t be hidden in plain sight. 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.
#10: Insurance policies
When collecting charges owed, check to see if your debtor has prepaid insurance policies. Common in divorce cases, people may prepay or overpay on insurance policies—such as life insurance and vehicle insurance policies—to later obtain a refund or simply prepay to avoid paying the judgment. Some insurance policies even have a cash surrender option like in the case of life insurance. When collecting charges owed, check all of the insurance policies that your debtor has.
#11: Tax overpayment
Did you know you can prepay the IRS for your taxes? It doesn’t sound desirable, but by doing this, the debtor gives the IRS control of those funds. Once the IRS has control of the funds, they can’t be seized or garnished.
#12: Delayed income
The debtor can work with their employer to defer or delay their income, making it appear as though they have significantly less income than they actually do. While their accounts may seem to be draining, they are building up funds to apply against the debt at a later date. If you are attempting to garnish an individual’s wages, garnishment only applies to a certain percentage of an employee’s income, so this is one of the places where you’re likely to find hidden assets.
#13: Fake invoice payments
Verify the recipients of all invoices. Some unscrupulous debtors will create fake invoices and send them to a company that doesn’t exist. Instead of paying the bogus company, the money goes directly into their bank account, disguised as an invoice payment. This is commonly done with corporations and other business entities that frequently pay third-party suppliers or contractors.
#14: Family and friends
Debtors often use close relatives, friends, or neighbors to hide assets from their creditors. 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 several other assets you may want to search for when conducting a hidden asset search, and it is important to thoroughly examine all sides of your case before filing a lawsuit. Hidden assets can be found in many forms, such as purchases made through trading accounts or cash. The ability to analyze and comprehend patterns in your debtor’s transactions is crucial when searching for hidden assets, so begin your investigation prior to litigation to find any potential hidden assets before your debtor is able to conceal them. Once an asset is discovered, it cannot remain hidden for long.
Looking for assistance to uncover hidden assets? Active Intel Investigations specializes in hidden asset searches. Start your hidden asset search today or schedule a consultation to talk one-on-one with a private investigator to discuss your case.