You do not have to prove the debtor meant to cheat you. A transfer made for less than fair value while the debtor was insolvent can be undone with no proof of intent at all. The clock to undo it is already running, and for some transfers it is one year.
The deadline comes first
Texas’s fraudulent-transfer statute does not use an ordinary limitations period. It extinguishes the claim. The general rule is four years from the transfer. A claim based on the debtor’s actual intent gets one more year after the transfer was discovered or reasonably could have been, if that is later. One category, a transfer to an insider on an old debt, has only one year from the transfer and no discovery extension.
Because the statute extinguishes the claim rather than barring the remedy, the usual rescue doctrines do not apply. The Supreme Court of Texas has held that the sixty-day grace period that saves a claim dismissed for want of jurisdiction does not save a fraudulent-transfer claim. The outer limit is the outer limit. Count from the date of the transfer, not from the date you found out, and assume the shorter period applies until you know otherwise.
What a fraudulent transfer is, and what it is not
The word fraud misleads people. The statute is not about lying. It is about a debtor parting with an asset so that a creditor cannot reach it. A transfer is any way of parting with an asset: a deed to a spouse, a sale to a new company the debtor controls, a payment to a relative, a loan forgiven. It does not reach property to the extent it is encumbered by a valid lien, because the creditor could not have reached that equity anyway.
You do not need a judgment to be a creditor. A creditor is anyone with a claim, and a claim includes one that is unliquidated, disputed, or untried. A plaintiff in a pending lawsuit can bring the fraudulent-transfer claim before the lawsuit is over. Waiting for the judgment is the most common mistake, because the clock runs from the transfer, not from the judgment.
Two roads: proving intent, or proving the numbers
The first road is actual intent to hinder, delay, or defraud any creditor. Debtors do not confess, so the statute lists badges of fraud that courts weigh: the transfer went to an insider; the debtor kept possession or control; the transfer was concealed; the debtor had been sued or threatened with suit; the transfer was of substantially all the debtor’s assets; the debtor absconded or removed or hid assets; the value received was not reasonably equivalent; the debtor was insolvent or became insolvent shortly after; the transfer came shortly before or after a substantial debt was incurred. No single badge decides it. Several together usually do.
The second road has no intent element. If the debtor did not receive reasonably equivalent value and was insolvent at the time or became insolvent as a result, the transfer is voidable by an existing creditor. Insolvency means debts greater than assets at fair valuation, and a debtor who is generally not paying debts as they come due is presumed insolvent. That is an accounting question. It is answered from bank statements, tax returns, and balance sheets, not from testimony about what anyone meant. A deed to a spouse for ten dollars and love and affection, recorded a month after the demand letter, is the typical case.
The transferee’s defense, and what you get back
Against an actual-intent claim, the person who received the asset keeps it only by proving two things: good faith, and reasonably equivalent value. The burden is on the transferee. Good faith is not ignorance. A transferee on notice of facts that would prompt a reasonable person to investigate has to show that it investigated. A transferee who acted in good faith but gave less than full value may receive a credit for what it paid and lose the rest. A transferee who lacked good faith has no statutory credit.
The remedies run against the asset and against the people who hold it. The court can set the transfer aside, attach the asset, enjoin further transfers, appoint a receiver over the asset or the transferee’s business, and enter a money judgment against the first transferee, and anyone for whose benefit the transfer was made, for the value of the asset or the amount of the debt, whichever is less. Costs and attorney’s fees are available as the court finds equitable and just. Exemplary damages have been awarded on the right facts.
What we do
These cases are built from records. The debtor’s deposition comes last, after the statements, check images, wire detail, deed records, and the transferee’s own books have been reconstructed into a timeline of what moved, when, to whom, and for what. We do that reconstruction ourselves rather than waiting for an outside report. A fraudulent-transfer claim can be filed with the underlying case, added to a pending case, or brought after judgment using post-judgment discovery to find the transfers. The practice page describes the firm’s fraud and fraudulent-transfer work.
Questions we are asked
He put the house in his wife’s name. Is that enough?
A transfer to a spouse is a transfer to an insider, which is one badge. Whether the house was the homestead matters more, because a homestead is exempt and a creditor could not have reached it anyway. The analysis starts with what the creditor could have reached before the transfer.
The company was sold to a new LLC with the same people.
Moving the assets to a successor and then shutting the old company down has been treated as some evidence that the company absconded, which is one of the badges. The questions become what the new company paid, and whether the old company was solvent when it did.
We do not have a judgment yet. Can we do anything?
Yes. A creditor with a pending claim can bring the fraudulent-transfer claim now, and should, because the deadline runs from the transfer. Interim relief is available to stop a second transfer while the case is pending.
This page is general information about how fraudulent-transfer law is structured. It is not legal advice. Results depend on the facts of each matter. Prior results do not guarantee or predict a similar outcome in any other matter.