How To Prove A California Intent to Hinder, Delay, or Defraud a Creditor Claim

 

How To Prove A California Intent to Hinder, Delay, or Defraud a Creditor Claim

 

In California, a claim of Intent to Hinder, Delay, or Defraud a Creditor is defined as:

Intent to Hinder, Delay, or Defraud a Creditor occurs in instances where a defendant or debtor will fraudulently conceal his, her or its assets by transferring them to a friend, relative, a related company or other cooperating third party, to try to look impecunious or judgment-proof, and avoid paying what is owed.

It simply means:

A person will be subject to legal action if they transfer property or incur an obligation in order to avoid paying a debt to a creditor.

There are 5 elements of the claim:

  • Element 1. The plaintiff had a right to payment from a debtor for a claim amount. The plaintiff was owed money by the debtor for a specific claim, which is an important part of proving that the debtor intentionally tried to make it harder for the plaintiff to get paid.

    Facts that might support this element look like:

    * The plaintiff provided goods and services to the debtor, resulting in an outstanding invoice that remains unpaid.
    * The debtor acknowledged the debt in writing, confirming the amount owed to the plaintiff.
    * The plaintiff has made multiple attempts to collect the debt, including sending formal demand letters to the debtor.
    * The debtor’s financial records indicate a clear obligation to pay the plaintiff for the claimed amount.
    * The plaintiff has a valid contract with the debtor that stipulates payment terms for the services rendered.

  • Element 2. The debtor transferred property or incurred an obligation to defendant. This means that the person who owes money either gave away their property or took on a new debt to the defendant, which can be seen as an attempt to make it harder for their creditors to get paid back.

    Facts that might support this element look like:

    * The debtor transferred ownership of a valuable piece of real estate to the defendant just weeks before filing for bankruptcy.
    * The debtor incurred a significant loan obligation to the defendant, which was not disclosed to other creditors.
    * The debtor sold a collection of high-value assets to the defendant at a fraction of their market value shortly before the creditor’s claim arose.
    * The debtor made a series of payments to the defendant that were inconsistent with their financial situation, suggesting an intent to conceal assets.
    * The debtor executed a lease agreement with the defendant for property that was previously owned by the debtor, effectively transferring control without proper disclosure.

  • Element 3. That debtor transferred the property or incurred the obligation with the intent to hinder, delay, or defraud one or more of their creditors. A debtor may be found guilty of trying to cheat their creditors if they purposely sold or gave away their property or took on new debts to make it harder for those creditors to get paid what they are owed.

    Facts that might support this element look like:

    * The debtor transferred the property to a relative shortly before filing for bankruptcy, suggesting an intent to shield assets from creditors.
    * The debtor incurred significant new obligations while aware of impending lawsuits from multiple creditors, indicating a strategy to evade repayment.
    * The debtor made the transfer without receiving fair consideration, which raises suspicion about the legitimacy of the transaction.
    * The debtor’s financial records show a pattern of transferring assets to friends and family just prior to creditor actions, demonstrating a clear intent to defraud.
    * The debtor failed to disclose the property transfer in their bankruptcy filings, further implying an intention to conceal assets from creditors.

  • Element 4. The plaintiff was harmed. The plaintiff must show that they suffered a real loss or damage because the defendant’s actions were meant to interfere with their ability to collect a debt, proving that the defendant’s behavior directly harmed them financially or otherwise.

    Facts that might support this element look like:

    * The plaintiff incurred significant financial losses due to the defendant’s actions, resulting in an inability to pay outstanding debts.
    * The plaintiff’s credit score was adversely affected, leading to higher interest rates on loans and credit applications.
    * The plaintiff was forced to sell personal assets at a loss to cover immediate financial obligations caused by the defendant’s conduct.
    * The plaintiff experienced emotional distress and anxiety due to the financial instability created by the defendant’s fraudulent actions.
    * The plaintiff lost business opportunities as a direct result of the financial harm inflicted by the defendant’s intent to defraud.

  • Element 5. The debtor’s conduct was a substantial factor in causing the plaintiff’s harm. The debtor’s actions played a significant role in causing the harm experienced by the plaintiff, meaning that what the debtor did directly contributed to the problems the plaintiff faced, especially in relation to the debtor’s intent to avoid paying their debts.

    Facts that might support this element look like:

    * The debtor transferred significant assets to a family member shortly before the creditor’s claim arose, indicating an intent to shield those assets from collection.
    * The debtor failed to disclose multiple bank accounts during the bankruptcy proceedings, suggesting an effort to conceal financial resources from the creditor.
    * The debtor incurred substantial debts while simultaneously liquidating valuable property, demonstrating a pattern of behavior aimed at defrauding creditors.
    * The debtor made large cash withdrawals immediately prior to the creditor’s lawsuit, raising suspicion about the intent behind these transactions.
    * The debtor’s financial records show a sudden drop in income reported to the creditor, coinciding with the timing of asset transfers, implying deliberate misrepresentation.

(See California Civil Jury Instructions (CACI), No. 4200.)
If you’re in court without a lawyer and plan to assert a Claim of Intent to Hinder, Delay, or Defraud a Creditor, having a Personal Practice of Law at Courtroom5 is essential. You’ll need to make informed decisions about what to file at each phase of your case and prepare legal documents supported by thorough legal research and a strong analysis of the facts. Equip yourself with the tools and knowledge to effectively navigate your legal journey.

Prove Your CA Intent to Hinder, Delay, or Defraud a Creditor Claim

U.S. Civil Cases Only

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