Parkin Son

Archive for August, 2009

Some businessmen have placed so-called “playfellow mortgagees” against their enterprises as asset insulation against claims and liens. Other strategies employed by asset protection practitioners is to let the corporation owned or controlled by the businessman also mortgage his personal assets. For example, the corporation you control may shield your personal properties if you owe money to your business. Your business entity will the mortgagee to some or all your personal assets including your home, motor vehicles, and valuable properties. A few debtors encumber their assets to close friends and associates, subject to the prevailing fraudulent conveyance rules. If they owe these friends some money, the debtors turn these preferred creditors into mortgagees and they hold a mortgage on the collateral to secure the credit obligations. This could be a risk-laden strategy if other creditors may show the existence of fraud and ask a court to set aside the transaction. This practice is dangerous and is not recommended by asset protection experts. Criminal liability may arise if it is shown that the debtor has a specific intent to commit a fraud or to abscond with his property to the prejudice of his creditors.