Fraudulent Transfers and the Texas Uniform Voidable Transactions Act: When the Debtor Puts Assets Out of Reach

By Hank FasthoffJuly 7, 2026

A judgment creditor who discovers through post-judgment discovery that the debtor transferred a rental property to a family member for $10 six months before the judgment was entered, or that the debtor moved $200,000 from a personal bank account into a newly formed LLC owned by the debtor's spouse, has encountered the most frustrating obstacle in collection practice: the debtor who anticipated the judgment and moved assets beyond the creditor's reach before enforcement could begin.

Texas law provides a remedy. Under Chapter 24 of the Texas Business and Commerce Code (commonly referred to as TUFTA, the Texas Uniform Fraudulent Transfer Act, modeled on the Uniform Fraudulent Transfer Act and functionally equivalent to the Uniform Voidable Transactions Act adopted in other states), a creditor can avoid transfers that were made with the intent to defraud creditors or that were made without fair value while the debtor was insolvent. If the transfer is avoided, the property (or its value) becomes available to satisfy the creditor's judgment as though the transfer never occurred.

Two Types of Fraudulent Transfers

TUFTA recognizes two categories of voidable transfers, each with different elements and different burdens of proof.

Actual fraud under § 24.005(a)(1) requires proof that the debtor made the transfer "with actual intent to hinder, delay, or defraud any creditor of the debtor." Intent is the central element. Because debtors rarely announce their intent to defraud, the statute provides a list of circumstantial factors known as "badges of fraud" that courts use to infer intent.

Constructive fraud doesn't require proof of intent at all. Under § 24.005(a)(2), a transfer is fraudulent as to present and future creditors if the debtor made the transfer without receiving a "reasonably equivalent value" in exchange and either the debtor was engaged in or was about to engage in a business or transaction for which the remaining assets were unreasonably small in relation to the business or transaction, or the debtor intended to incur, or believed or reasonably should have believed the debtor would incur, debts beyond the debtor's ability to pay as they became due.

Under § 24.006, a separate constructive fraud theory applies to present creditors only: a transfer is fraudulent if made without receiving reasonably equivalent value and the debtor was insolvent at the time or became insolvent as a result of the transfer.

A third theory under § 24.006(b) targets insider transfers: a transfer to an insider for an antecedent debt is fraudulent as to present creditors if the debtor was insolvent at the time and the insider had reasonable cause to believe the debtor was insolvent.

Badges of Fraud

Section 24.005(b) lists 11 factors that courts consider as circumstantial evidence of actual fraudulent intent. No single factor is determinative, but the presence of several factors supports a finding of fraud.

• An insider received the transfer (a family member, a related entity, a business partner, or an officer or director of the debtor entity).
• Possession or control stayed with the debtor after the transfer (the debtor "sold" the house to a relative but kept living there).
• The transfer was concealed (the debtor didn't disclose the transfer in post-judgment discovery responses or financial statements).
• A lawsuit or the threat of one preceded the transfer.
• The transfer was of substantially all the debtor's assets.
• The debtor absconded (left the jurisdiction or became unreachable).
• The debtor removed or concealed assets.
• The value received for the transferred property was not reasonably equivalent to the property's value.
• The debtor was insolvent or became insolvent shortly after the transfer.
• The transfer occurred shortly before or shortly after a substantial debt was incurred.
• The debtor transferred essential business assets to a lienor who transferred the assets to an insider of the debtor.

Courts evaluate these factors in combination. A debtor who transferred a rental property to a sibling for $10 while a lawsuit was pending, continued to collect the rent, and didn't disclose the transfer in discovery responses has triggered at least five badges of fraud (insider, inadequate consideration, concealment, pending litigation, retention of control), and the circumstantial case for actual intent is strong.

"Reasonably Equivalent Value"

For constructive fraud claims (which don't require intent), the creditor must prove the debtor didn't receive "reasonably equivalent value" in exchange for the transfer. Under § 24.004, value is given for a transfer if, in exchange for the transfer, property is transferred or an antecedent debt is secured or satisfied, but value doesn't include an unperformed promise made otherwise than in the ordinary course of the promisor's business.

"Reasonably equivalent" requires that the value received be roughly proportional to the value transferred, considering the totality of the circumstances, not dollar-for-dollar equality. A debtor who sells a $500,000 property for $450,000 in a genuine arm's-length transaction has received reasonably equivalent value. A debtor who transfers the same property to a family member for $10 has not.

Insolvency

Constructive fraud claims under § 24.006(a) require the creditor to prove the debtor was insolvent at the time of the transfer or became insolvent as a result. Under § 24.003, a debtor is insolvent if the sum of the debtor's debts is greater than all of the debtor's assets, at fair valuation. A debtor who is generally not paying debts as they become due is presumed to be insolvent.

Remedies

Section 24.008 provides several remedies when a transfer is found to be fraudulent.

Avoidance of the transfer to the extent necessary to satisfy the creditor's claim. This means the court can reverse the transfer and make the property available for execution as though it were never transferred.

Attachment or other provisional remedy against the transferred asset or other property of the transferee. If the property has been transferred a second time (from the initial transferee to a subsequent purchaser), the creditor may pursue the property in the hands of the subsequent transferee (unless the subsequent transferee took in good faith and for value).

Injunction against further disposition of the asset by the debtor or the transferee. This prevents the property from being moved again while the creditor pursues avoidance.

Appointment of a receiver to take possession of the asset. This is particularly useful when the transferred property is a going business, an income-producing asset, or property that requires management pending resolution.

Any other relief the circumstances may require. Section 24.011 grants courts broad equitable authority to fashion remedies as the situation demands.

Defenses

Good-faith transferee for value. Under § 24.009(a), a transfer isn't voidable against a person who took in good faith and for reasonably equivalent value. If the debtor's sibling paid fair market value for the property and had no knowledge of the debtor's intent to defraud creditors, the transfer is protected.

Insider defenses under § 24.009(f). A transfer to an insider isn't voidable to the extent the insider gave new value to or for the benefit of the debtor after the transfer (unless the new value was secured by a valid lien), if the transfer was made in the ordinary course of business or financial affairs of the debtor and the insider, or if the transfer was made pursuant to a good-faith effort to rehabilitate the debtor and the transfer secured present value given for that purpose.

Statute of Limitations

Under § 24.010, the limitations periods for TUFTA claims are four years after the transfer was made for actual fraud claims under § 24.005(a)(1), or one year after the transfer was or reasonably could have been discovered by the creditor, whichever is later, and four years after the transfer was made for constructive fraud claims under § 24.005(a)(2) and § 24.006.

A creditor who discovers in year five that the debtor made a fraudulent transfer in year one may still have a viable actual fraud claim (if the one-year discovery period hasn't expired), but the constructive fraud claim is time-barred because the four-year period from the date of transfer has elapsed.

TUFTA Claims Are Separate Lawsuits

A TUFTA claim can't be asserted as a post-judgment motion in the original collection case. It requires filing a separate lawsuit against the transferee (and potentially against the debtor) to avoid the transfer. This means additional filing fees, service of process on the transferee, and a separate litigation track. If the transferred property is real estate, the TUFTA suit should include a lis pendens filing to put subsequent purchasers on notice of the creditor's claim.

Practical Recommendations

Ask about transfers in every post-judgment discovery request. Interrogatories should cover every transfer of property the debtor made within the preceding four years (the TUFTA limitations period), including the identity of the transferee, the consideration received, the date, and whether the transferee is a family member, insider, or related entity. If the debtor fails to disclose transfers that the creditor later discovers through public records searches, the concealment itself becomes a badge of fraud.

Compare the debtor's current assets to what the debtor owned when the debt was incurred or when the lawsuit was filed. If the debtor owned a rental property, a vehicle, and $100,000 in bank deposits when the contract was signed, and now owns only a homestead and exempt personal property, the creditor should investigate where the non-exempt assets went.

Pursue TUFTA claims promptly. If post-judgment discovery reveals a suspicious transfer, evaluate the TUFTA claim immediately. Waiting for the four-year limitations period to expire eliminates the constructive fraud theory, and waiting for the one-year discovery period to expire after learning of the transfer eliminates the actual fraud theory.

File a lis pendens if the transferred property is real estate. A lis pendens recorded in the county where the property is located puts subsequent purchasers on notice that the creditor is challenging the transfer, which prevents the property from being sold to a good-faith purchaser who would take free of the creditor's claim.

Consider whether the debtor's conduct also supports criminal liability. Under Texas Penal Code § 32.33 (Hindering Secured Creditors), a debtor who intentionally or knowingly destroys, removes, conceals, encumbers, transfers, or otherwise harms or reduces the value of property securing a debt commits an offense. While TUFTA is a civil remedy, the existence of potential criminal liability can influence settlement discussions.