Civil Litigation

Fraudulent Conveyance (Creditor's Revocation) Lawsuit Lawyer

Fraudulent Conveyance (Creditor's Revocation) Lawsuit Lawyer | Getting a debtor's hidden transfer undone

Summary

A fraudulent conveyance lawsuit (사해행위취소소송) is a creditor's right to ask a court to cancel a legal act by the debtor — a sale, a gift, a debt settlement, a mortgage — that reduced the debtor's assets to the point that the creditor can no longer be paid in full (민법 제406조). It is not enough that the debtor is simply broke; you must show the specific transaction caused or worsened that insolvency and that the debtor (and often the other party) knew it would hurt creditors. Because the deadline to file is short and starts running from when you first learn of the transfer, delay is the single biggest risk in these cases.

Civil · Debt Collection Related law: Civil Act (민법) Creditor's Revocation Right

Fraudulent Conveyance (Creditor's Revocation) Lawsuit | What You Actually Have to Prove

Courts do not cancel every transfer a struggling debtor makes. Four elements have to line up before a judge will unwind the transaction.

A valid claim against the debtor

You need an existing monetary claim against the debtor, and in most cases that claim must have arisen before the challenged transfer took place. If your claim came into existence only after the transfer, courts generally will not let you use it as the basis for revocation, with narrow exceptions where the debt was already foreseeable at the time of the transfer.

The transfer must cause 'insolvency' (사해행위)

The core test is whether the debtor's total liabilities now exceed total assets after the transfer, leaving nothing left for creditors to seize (민법 제406조 제1항). A sale at fair market price can still qualify if the debtor immediately spends or hides the cash proceeds, because what matters is whether the creditor can still reach something of value, not just whether the price was fair.

The debtor's bad faith (사해의사)

The debtor must have known, at the time of the transfer, that it would harm creditors' ability to collect. This does not require an intent to defraud anyone specifically — courts treat awareness that the act would reduce recoverable assets as sufficient.

The other party's bad faith is presumed

Once you show the debtor's bad faith, the law presumes the person who received the transfer (or a later purchaser) also knew about it, and the burden shifts to that person to prove they acted in good faith. This presumption is often the decisive factor when family members or closely related companies received the asset.

Fraudulent Conveyance (Creditor's Revocation) Lawsuit | Who You Sue and What You Can Get Back

The lawsuit is filed against the person who received the asset or benefit — not against the debtor. Understanding this structure changes how you plan the case from the start.

Defendant is the recipient, not the debtor

Because the claim challenges the transaction itself, the proper defendant is the beneficiary (the buyer, the gift recipient, the mortgagee) or a subsequent transferee who is not in good faith — the debtor is not a required party to the lawsuit, though joining related claims against the debtor is common.

Relief is typically 'restore the asset,' not 'pay the creditor directly'

The classic remedy is cancellation of the transfer and restoration of the property to the debtor's estate, after which the creditor pursues normal enforcement (seizure, auction) against that restored asset. Where the property itself cannot be returned (e.g., cash already spent, or a third party now holds registered title in good faith), the court can order the recipient to pay the equivalent value instead.

Effect is limited to the amount you can claim

Revocation is only granted to the extent needed to satisfy the plaintiff creditor's claim — if the property is divisible, courts will not cancel the whole transaction just to recover a small debt. This matters when multiple creditors are competing over the same recovered asset.

Fraudulent Conveyance (Creditor's Revocation) Lawsuit | The Filing Deadline Is Short and Easy to Miss

Unlike ordinary civil claims, this lawsuit has its own dedicated limitations period that runs independently of your original debt claim.

One year from when you learn of the fraud

The lawsuit must be filed within one year from the date the creditor learns of the fraudulent act, and in any case within five years from the date the act occurred (민법 제406조 제2항). 'Learning of the fraudulent act' generally means knowing both that the transfer happened and that it was made with intent to harm creditors — mere suspicion is usually not enough, but courts scrutinize this carefully.

Five-year outer limit applies regardless of knowledge

Even if a creditor never actually discovers the transfer, the right to sue disappears five years after the act itself, so long delays in monitoring a debtor's asset movements can permanently close off this remedy.

Fraudulent Conveyance (Creditor's Revocation) Lawsuit | From Consultation to Final Judgment

Initial consultation and claim review
We review your underlying claim against the debtor, the timing and nature of the suspicious transfer, and confirm how much time remains before the one-year or five-year deadline expires.

Asset and transfer tracing
We gather registry records, financial transaction data, and family/corporate relationship evidence to establish the debtor's insolvency and the recipient's likely awareness of it.

Filing suit and provisional measures
The complaint is filed against the beneficiary or subsequent transferee, often paired with a provisional injunction or provisional seizure to stop the asset from being moved again while the case is pending.

Litigation and proof of bad faith
Both sides present evidence on the debtor's financial state at the time of the transfer and whether the recipient knew or should have known about the harm to creditors; the presumption of the recipient's bad faith is frequently the central battleground.

Judgment and restoration of assets
If the transfer is revoked, the asset (or its value) is restored to the debtor's estate, after which enforcement procedures such as seizure or auction can proceed against it to satisfy your original claim.

Fraudulent Conveyance (Creditor's Revocation) Lawsuit | How Fees Are Calculated

Retainer fee
Generally set based on the value of the property or claim you are seeking to recover, since that value determines the court filing fee and the complexity of asset tracing required.

Contingency fee
If applicable, a success fee tied to the value actually restored to the debtor's estate or recovered through subsequent enforcement, agreed in advance and set out in the retainer agreement.

Court costs and stamp duty
Filing fees and stamp duty are calculated based on the value of the property being challenged, and provisional injunction/seizure applications carry their own separate court costs and bond requirements.

Investigation and evidence-gathering costs
Costs for real estate registry searches, corporate registry checks, and financial account tracing to establish the debtor's insolvency and the recipient's relationship to the debtor.

※ Costs vary depending on case complexity and specific circumstances; exact fees will be provided during consultation. No specific outcome is guaranteed.

Fraudulent Conveyance (Creditor's Revocation) Lawsuit | Self-Check Before You File

1️⃣ Is This Actually a Fraudulent Conveyance Case?

Did the debtor sell, gift, or mortgage an asset after your claim against them arose (or was foreseeable)?
Did the debtor's remaining assets become insufficient to cover their debts because of that transaction?
Was the transfer made to a family member, related company, or someone likely aware of the debtor's financial trouble?
Is there a paper trail (registry, bank records) showing when the transfer actually happened?

2️⃣ Checking the Deadline

When exactly did you first learn about the transfer and its suspicious nature?
Has more than one year passed since you learned of it?
Has more than five years passed since the transfer itself occurred, regardless of when you learned about it?

3️⃣ Preparing to Sue the Right Party

Do you know the current holder of the asset, including any subsequent buyer down the chain?
Is the asset still traceable and specific enough for a court to order its return or valuation?
Do you have an underlying, provable monetary claim against the debtor to justify the lawsuit?

Frequently Asked Questions

Q. Can I file this lawsuit even if the debtor hasn't declared bankruptcy?

A. Yes. A creditor's revocation lawsuit is a separate civil remedy that does not require the debtor to be in bankruptcy or individual rehabilitation proceedings (민법 제406조). It is often used precisely because formal insolvency proceedings have not started yet and assets are actively being moved.

Q. What if the debtor sold the property at a fair price, not as a gift?

A. A sale at fair market value can still be challenged if the debtor then hides, spends, or otherwise makes the cash proceeds unreachable to creditors, because the legal test focuses on whether creditors can still recover value, not merely whether the sale price was fair. Cases involving cash conversion of real estate are common in practice.

Q. Do I need to sue the debtor as well as the person who received the asset?

A. No, the lawsuit is properly directed at the beneficiary or a bad-faith subsequent transferee, since the claim challenges the validity of the transfer itself rather than seeking a separate judgment against the debtor. Many creditors do pursue a parallel collection case against the debtor, but it is not a required part of this lawsuit.

Q. How is the one-year deadline calculated if I only had suspicions at first?

A. The one-year clock generally starts when you have concrete knowledge of both the transfer and facts suggesting it was made to harm creditors, not merely a vague suspicion (민법 제406조 제2항). Because courts examine the specific facts of when you 'knew,' documenting exactly when and how you discovered the transfer is important.

Q. Can I get provisional seizure on the asset while the lawsuit is ongoing?

A. Yes, a provisional seizure or injunction can often be requested alongside or before filing the main lawsuit to prevent the asset from being sold or moved again while the case is being decided. This is frequently critical because a further transfer to a good-faith third party can make the property practically unrecoverable.

Q. What happens if the recipient already resold the property to someone else?

A. If that subsequent buyer acted in good faith and did not know about the fraudulent nature of the original transfer, the property itself may become unrecoverable, and the remedy typically shifts to ordering the original recipient to pay the equivalent monetary value instead. This is one reason speed matters in these cases.

Q. Does it matter if the debtor and the recipient are family members?

A. Yes, transfers between family members or closely related parties tend to draw closer scrutiny, and once the debtor's bad faith is shown, the law presumes the recipient also knew about the harm to creditors, shifting the burden to the recipient to prove otherwise. Gifts and below-market sales to relatives are common fact patterns in these disputes.

Q. Can a mortgage or other security interest be challenged, not just an outright sale?

A. Yes, granting a mortgage, pledge, or other security interest to one creditor at the expense of others can itself qualify as a fraudulent act if it effectively removes the last available asset from the general pool of creditors. The same insolvency and bad-faith analysis applies regardless of the type of transaction.

Q. What evidence is most useful to prove the debtor's insolvency at the time of transfer?

A. Real estate and vehicle registry records, bank account statements around the transfer date, corporate registry filings for related entities, and any records showing other unpaid debts at the time are typically the most persuasive documentation. A comprehensive snapshot of the debtor's assets and liabilities right before and after the transfer is usually the centerpiece of the case.

Q. If I win, does the money come directly to me?

A. Not usually — the standard outcome is that the transfer is cancelled and the asset (or its equivalent value) is restored to the debtor's estate, after which you still need to pursue seizure or auction procedures against that restored asset to actually collect your debt. Coordinating this lawsuit with your broader enforcement strategy matters for how quickly you actually get paid.

Q. Should I consult a local lawyer if the debtor's assets are in a different city?

A. Working with a fraudulent conveyance lawsuit lawyer familiar with the local district court and registry offices where the asset is located can help speed up the asset-tracing and provisional seizure process, since procedures and local registry practices can vary by jurisdiction.