Locating Hidden Assets

Collections Training Resource
October 23, 2012 — 1,039 views  
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Locating Hidden Assets

One of the most frustrating things for bankruptcy courts, tax collectors, professional debt collectors, or divorce attorneys is the hiding of assets during the proceedings. Assets can include anything of worth which the person owing a debt is attempting to hide. Sometimes, even the debtor themselves is hidden. A missing debtor can further complicate complex proceedings involving finances.

For those attempting to track down hidden assets, there are a few tips which can help to uncover hidden assets.

Corporate Umbrella Strategy

People often turn to the secretive world of incorporation as an effort to hide assets. What these individuals do is declare themselves, through legal means, as a company operating in an industry. The company does not need anything other than a registered name.

Under this structure, assets can be hidden as business assets, exempting them from most personal claims. By challenging the date of incorporation or when the assets were moved into the business, assets can be uncovered for collection purposes.

Gifting

Gifting is one of the more frustrating ways assets are hidden. An individual will give away possessions to a family member or friend as a gift. After the debts are resolved, the gifts are returned to the individual.

Beyond being frustrating to collection efforts, gifts are often hard to disprove. Most gifts are not recorded with documentation or paperwork. Bank statements, deeds, or writs may have been prepared for certain assets, but not in all cases.

When dealing with an asset claimed as a gift, be prepared to prove the gift was given after the collection efforts started and with the sole intention of hiding the asset from recovery efforts.

Trust Funds

As with corporate umbrellas, trust funds are a popular mechanism for hiding assets. By claiming they are part of a trust fund, debtors are able to keep the trust fund away from financial obligations.

In order to unearth hidden assets from a missing debtor, a paper trail must be examined. Any asset added or subtracted from the trust must be filed on paperwork and dated. The paper trail will show when the assets in question were added to the trust fund. Those added after the initiation of collection assets will be vulnerable for inclusion.

Success

These three areas are the most common, and frustrating, methods of hiding assets. When attempting collection, pay attention to these hiding spots.

 

Collections Training Resource