Fraudulent Conveyance Under Debtor & Creditor Law § 276 as a Cause of Action in New York

Fraudulent conveyance claims allow creditors to challenge transfers of property or money made by a debtor for the purpose of avoiding debts. Under New York’s Debtor and Creditor Law § 276, a creditor can sue to reverse a transfer if it was made with the actual intent to hinder, delay, or defraud creditors. This cause of action is designed to prevent debtors from shielding assets through dishonest transfers. To bring a successful claim under this law, the plaintiff must prove two key elements.

A Conveyance Was Made

The first requirement is that a conveyance occurred. A conveyance is any transfer of property or assets, which can include the sale of real estate, the transfer of money, or the assignment of rights to someone else. The form of the transfer does not matter as much as the fact that the debtor moved assets out of their name or reach. The law is concerned with the effect of the transaction, not whether it was formal or informal.

The transfer must be made by the debtor, or someone acting on the debtor’s behalf, and it must involve property that could otherwise have been used to satisfy the debtor’s obligations to creditors. Even if the transaction looks legitimate on the surface, it can still qualify as a conveyance if it removes assets from the debtor’s estate in a way that harms creditors.

The Conveyance Was Made With Actual Intent to Hinder, Delay, or Defraud Creditors

The second element focuses on the debtor’s intent. The plaintiff must prove that the purpose of the transfer was to keep assets away from current or future creditors. This is not about negligent or careless transfers—it requires a showing of actual intent to interfere with creditor claims.

Because direct evidence of intent is rare, courts often consider circumstantial factors, sometimes called “badges of fraud.” These may include transfers made to family members or close associates, transfers made for little or no value, secrecy surrounding the transaction, or a transfer made while the debtor was being sued or under financial pressure. If enough of these indicators are present, a court may infer that the debtor acted with the required fraudulent intent.

Conclusion

A fraudulent conveyance claim under Debtor and Creditor Law § 276 allows creditors to undo asset transfers made with the intent to avoid paying debts. To succeed, the plaintiff must prove that a transfer occurred and that it was carried out with actual intent to hinder, delay, or defraud. This cause of action helps ensure that debtors cannot escape their financial obligations by moving assets out of reach through deceptive or manipulative transactions.

Find the Law

“The elements of a fraudulent conveyance action under Debtor & Creditor Law § 276 include that (1) a conveyance was made with (2) actual intent to hinder, delay or defraud present or future creditors (Debtor and Creditor Law § 276). ” Seidler v. Workable Atl. LLC, 2020 N.Y. Slip Op. 31224, 9 (N.Y. Sup. Ct. 2020)