The Law Offices of Ronald P. Slates, P.C.
A Proffessional Corporation est 1980

California law prohibits debtors from hiding assets

Debtors only have so many legal options available to them in attempting to protect assets from being available to creditors should the debtor be behind in their payments.  California law makes it a crime for debtors to conduct themselves in such a matter that would defeat the rights of creditors.  This is particularly true if the conduct would in effect "defraud, hinder or delay" a creditor.

For example, California Penal Code, Section 154, forbids a debtor from removing property out-of-state by fraudulent means.  If the value of the property is in excess of $250, it could mean that the offense will be considered a felony by the courts.  And California Penal Code, Section 155, forbids the moving or concealing of property particularly in circumstances where a debtor has a legal action pending against them.  There is also California legislation that forbids anyone not a debtor from being a party to any unlawful transference of property mentions in sections 154 and 155.

We as attorneys have seen in the past many individuals and businesses that are in debt attempt to circumvent the regulations that are in place. This is especially true in the area of commercial real estate where we are seeing so many homeowners underwater.

Yet debtors of any kind owe a duty to the creditors the moment one places their signature upon loan documentation.  As the news media during the past few years has only been prone to point out the rights of debtors in relation to creditors, it may surprise readers that California has put into place so many laws aimed at debtors.

The clear intent of such sections is to provide creditors the legal rights to collect upon debts.

Source: Forbes, "Asset Protection Planning and California Rule of Professional Conduct 3-210," Jay Adkisson, June 30, 2013