Fraudulent Transfers Aren’t Fraud

It is possible that a creditor could have a valid lawsuit for fraudulent transfer and fraud, the two claims are actually quite different. Fraudulent transfer lawsuits are based on the Texas Fraudulent Transfer laws and only exist when the debtor violates those laws.

Fraud, on the other hand, is based on a debtor’s fraudulent actions, like making a promise at a time when they know it’s not true. The debtor makes that promise wanting you to rely on that promise. For instance, ordering something from you that you deliver to them on credit. But the debtor knows they never intend to pay. That’s what lawyers call “common law fraud.” When the debtor makes representations to you that are false, or even just what the law calls “reckless,” they can be held liable for “common law fraud.”

But that’s not the same thing as a transfer of an asset by a debtor to avoid paying his creditors.

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