A situation creditors often face: while you are chasing payment or after you have sued, a debtor who used to own a house, land and a car suddenly has nothing left in their own name. The land has been transferred to a child, the car sold to a friend at a low price, or the company's machinery moved to a new company owned by a relative.
The law does not let debtors do this easily. A creditor has three tools, used at different stages, and each has its own deadline.
1. Seize or attach assets before judgment
If you see the warning signs before or during the case, you can ask the court for interim protection, for example an order to seize or attach the debtor's assets before judgment, so that the assets do not disappear before a judgment can be enforced.
The condition is evidence that the debtor is moving, hiding or disposing of assets to escape enforcement. A feeling that the debtor is likely to run is not enough. Useful evidence includes an advertisement offering the asset for sale, registry changes made while you were chasing payment, or messages in which the debtor says they will transfer assets out.
2. Sue to revoke the fraudulent transfer (civil)
If the debtor has already transferred the asset, the creditor can sue to have the court revoke the transfer when it prejudices the creditor and the debtor knew it would do so.
- If it was a gift, for example giving land to a child, the only question is whether the debtor knew.
- If it was a sale for consideration, you must also prove that the buyer knew those facts. An unusually low price, a close relationship between seller and buyer, and timing that coincides with the period when you were chasing payment are circumstantial evidence the court takes into account.
Deadline: the suit must be filed within one year of the creditor learning of the grounds for revocation, and no later than ten years from the date the debtor made the transfer. A creditor who knows about the transfer but waits for the main case to finish may already be past the one-year limit.
Once the court revokes the transfer, the asset returns to the debtor and the creditor can enforce judgment against it.
3. Prosecute for defrauding creditors (criminal)
Moving, hiding or transferring assets to another person, knowing that the creditor is or is likely to bring a court claim for payment, in order to prevent the creditor from being paid, may amount to the offence of defrauding creditors.
It is a compoundable offence. The injured party must file a complaint within three months of learning of the offence and the identity of the offender. Once this period passes, the criminal case is time-barred.
A criminal case does not directly get the creditor paid, but in practice it often brings the debtor back to the negotiating table. It must be used carefully: filing a police report without grounds in order to pressure someone into paying is a risk the creditor bears.
Where to find evidence of the transfer
- Company registry: details of directors, shareholders and changes to the company can be requested from the Department of Business Development. A company that changed its shareholders or directors while debts were being chased is an important warning sign.
- Land information where the location is known: the registration history of a plot that used to belong to the debtor.
- Witnesses and messages: people in the same industry, advertisements offering assets for sale, or chats in which the debtor talks about the transfer.
Some information, such as bank accounts, can be obtained only through the court or the enforcement officer. A creditor must use only lawful channels.
Timing is everything
All three tools have shorter deadlines than most creditors expect: three months for the criminal case, one year for revocation, and an interim protection request works only while the assets are still there. A creditor who sees the signs and waits usually loses all three chances at once.
📌 See more: Asset tracing and enforcement · You won the case but the debtor will not pay: enforcement must be done within 10 years
If you believe a debtor is transferring or hiding assets, consult our lawyers as soon as possible. We will help assess which tools can still be used in time and whether your evidence is sufficient.
This article is general information and is not legal advice for any specific case.
