Creditors and Plaintiffs May Void Transfers of Property Intended to Defeat Creditors

In a case captioned Bishop v. Patton, the Georgia Supreme Court addressed Georgia's Uniform Fraudulent Transfer Act, O.C.G.A. Section 18-2-71, et al. (the "UFTA"),  in the context of the claims against a man who had murdered the relative of the plaintiffs.  The court examined the facts of the case under a multi-factored approach under the UFTA and upheld a trial court's injunction against further transfers of the contents of financial accounts, while reversing the trial court's preliminary injunction against further transfers of a house.

The UFTA is an act that prevents someone who owes money or is subject to a lawsuit or claim for money from hiding or secreting his assets or giving a person close to him a preference in or gift of the assets.  The law in Georgia was adopted by the Georgia General Assembly and codifies centuries of common law regarding what constitutes a fraudulent conveyance.   Without the law, any party or debtor could simply transfer their assets away in anticipation of being the subject of a claim or lawsuit and avoid a debt.

The opinion in Bishop, supra, contains a straight forward assessment of facts of a case applying the UFTA's factors, or "badges of fraud," to review a trial court's order under the statute.  Anyone thinking about transferring their assets to a relative or other person to avoid having to pay creditors should consult an attorney about the law before doing so.  The consequence of violating the statute may cause a plaintiff or creditor to sue the person to whom a potential defendant transfers an asset.