If the purpose of the civil justice system is to compensate damages with a money judgment, how does the system handle wrongdoers who frustrate that purpose by making themself “judgment proof”? This article provides an overview of the solution to that problem—namely, the law of fraudulent transfers.
The terms “fraudulent transfer” and “voidable transfer” are interchangeable and broadly refer to asset transfers that improperly hinder the ability of “creditors” to collect on valid claims against “debtors.” In this context, the term “creditor” includes anyone with a claim, whether or not that claim is liquidated, whether or not a lawsuit yet has been filed, and whether or not the claim already has been reduced to a judgment. Likewise, the term “debtor” includes anyone who is or may be liable on a claim, whether or not that person already has been named as a defendant, and regardless whether a judgment has entered yet.
“Fraudulent transfers” or “voidable transfers” encompass all manners and modes of asset transfers that are made “with actual intent to hinder, delay, or defraud” existing creditors. They also encompass asset transfers designed to hinder future creditors whose claims have not yet arisen, including what commonly is called “asset protection” (i.e., attempting to put assets beyond reach in the event one incurs liability in the future). Asset transfers also may be “constructively fraudulent,” even if not specifically intended to hinder creditors, as where a debtor pays legitimate debts owed to “insiders” (e.g., relatives), rendering them unable to pay their arms-length creditors.
Since 1991, fraudulent transfers in Colorado have been governed by the Colorado Uniform Fraudulent Transfer Act, or “CUFTA.” In 2025, the Colorado enacted Senate Bill 25-133 to update CUFTA and bring it somewhat in line with the Uniform Law Commission’s 2014 Uniform Voidable Transactions Act (“UVTA”). Colorado’s updated law (which presumably will be known as “CUVTA”) includes technical modifications that clarify preexisting law as well as a handful of substantive changes that will be discussed in this article.
Background on Fraudulent Transfer Laws
“Fraudulent transfers” or “voidable transfers” encompass all manners and modes of asset transfers that are made “with actual intent to hinder, delay, or defraud” existing creditors. They also encompass asset transfers designed to hinder future creditors whose claims have not yet arisen, including what commonly is called “asset protection” (i.e., attempting to put assets beyond reach in the event one incurs liability in the future). Asset transfers also may be “constructively fraudulent,” even if not specifically intended to hinder creditors, as where a debtor pays legitimate debts owed to “insiders” (e.g., relatives), rendering them unable to pay their arms-length creditors.
Since 1991, fraudulent transfers in Colorado have been governed by the Colorado Uniform Fraudulent Transfer Act, or “CUFTA.” In 2025, the Colorado enacted Senate Bill 25-133 to update CUFTA and bring it somewhat in line with the Uniform Law Commission’s 2014 Uniform Voidable Transactions Act (“UVTA”). Colorado’s updated law (which presumably will be known as “CUVTA”) includes technical modifications that clarify preexisting law as well as a handful of substantive changes that will be discussed in this article.
Laws for setting aside transfers made to defraud creditors can be traced to the Parliament of England’s passage in 1571 of the Fraudulent Conveyances Act, also known as the Statute of 13 Elizabeth. The Act declared transfers made with the “intent to delay, hinder or defraud” creditors to be void. As courts interpreted and applied the Act, the law of fraudulent transfers developed toward what we see today in CUFTA and CUVTA. For example, the Star Chamber’s famous decision in Twyne’s Case identified several factors from which intent to defraud could be ascertained. Those factors, a few of which still are used today, evolved into the 11 so-called “badges of fraud” that CUFTA and CUVTA direct judges to consider when determining fraudulent intent. Another important early decision under the Act was Alderson v. Temple, which established the principle that the Act also applied to transfers by insolvent debtors that were preferential as to one creditor but detrimental to others.
After the American Revolutionary War, most states enacted their own versions of fraudulent transfer laws. Colorado’s early fraudulent transfer statute that traces its roots to the1868 Revised Statutes. (That early law technically remains on the books today at C.R.S. § 38-10-117 but no longer applies in practice.)
An interest in consistency across states and the general uniform law movement eventually led to the development of the Uniform Fraudulent Conveyance Act in 1918. That uniform law later was updated to the Uniform Fraudulent Transfer Act in 1984.
Colorado enacted the Uniform Fraudulent Transfer Act in 1991. The uniform law provides a detailed codification of the laws surrounding fraudulent transfers.
CUFTA, as it came to be known, closely followed the uniform law. However, in 2014, the General Assembly amended CUFTA along bipartisan lines to provide enhanced damage remedies for transfers made “[w]ith actual intent to hinder, delay, or defraud any creditor of the debtor.” C.R.S. § 38-8-105(1)(a); see also C.R.S. § 38-8-108(1)(c). The intent behind the amendment was to deter fraudulent conveyances and provide creditors with compensation beyond the standard equitable remedy of avoidance of a transfer deemed to be fraudulent. Colorado is unique among states in providing this enhanced damage remedy.
2025 Amendments Adopting CUVTA
Senate Bill 25-133, which implements the Colorado Uniform Fraudulent Conveyance Act or “CUVTA,” was signed by Governor Polis on April 7, 2025. CUVTA took effect on August 6, 2025, and applies “to claims filed on or after the applicable effective date of this act” (as opposed to asset transfers or transactions after the effective date).
CUVTA’s use of the term “voidable transaction” as opposed to “fraudulent transfer” is not a substantive change in the law. However, this change in language is still important, as it is intended to emphasize that matters within the scope of the act are not necessarily limited to conduct that would be regarded as “fraudulent” as that term commonly is used, nor must a “transfer” of assets necessarily take place for a transaction to fall within the scope of the act. The phrase “voidable transaction” clarifies that the act broadly regards certain types of “transactions” to be improper and therefore “voidable.”
One important change from CUFTA to CUVTA is that the limitations period for bringing claims under section 38-8-106(2) has been increased from one year after the date of the transaction in question to four years. That section applies to so-called preferential or constructively voidable transfers—namely, where an insolvent debtor pays a relative or other insider for a valid preexisting debt, leaving the debtor unable to pay arms-length creditors. In practice, the former one-year limitations period was unworkable, because creditors rarely would have a reasonable chance to discover the debtor’s preferential transfer to an insider within one year of the date of the transfer. The new four-year limitations period also makes the limitations periods for various types of claims under CUVTA more uniform.
Other notable but non-substantive modifications include an update to the definition of insolvency, language clarifying which party bears the burden of proof as to certain claims, defenses, and rebuttable presumptions. CUVTA also updates the definition of insolvency in two respects, clarifying that a debtor who generally is not paying his debts bears the burden of proving by a preponderance of the evidence that he is not insolvent, and adopting the definition of insolvency from the federal bankruptcy code.
CUVTA retains Colorado’s 2014 amendment to CUFTA, which created enhanced remedies for creditors who provide “actual intent to hinder, delay, or defraud.” In such cases, the creditor may recover an additional judgment amounting to the lesser of (a) 50% of the value of the asset transferred or (b) 50% of the amount necessary to satisfy the creditor’s claim. For example, where a debtor transfers real property worth $1,000,000 to his brother for no consideration and continues to reside at the property in an effort to escape collection of a judgment for $1,500,000, CUVTA would allow the court to award an additional damage remedy against the debtor and his brother in the amount of $500,000. This enhanced damage remedy is unique to Colorado and is intended both to deter intentional misconduct and to compensate creditors for the expense of pursuing such claims.
Practical Guidance for Voidable Transfer Cases
Lawyers who represent plaintiffs should investigate defendants for potential fraudulent transfers in any case where the ability to collect a judgment may be in doubt—for example, where insurance coverage may be insufficient or nonexistent. Plaintiffs’ counsel should run searches on defendants’ real estate ownership history and investigate potentially suspect transactions. After judgment, post-judgment discovery can be used to obtain bank and brokerage account records as well as other financial records to investigate possible fraudulent transfers of assets.
A common misconception is that a plaintiff needs to obtain a judgment before pursuing claims for voidable transfers. To the contrary, a plaintiff can pursue such claims in the same litigation as the primary claims against a defendant. The risk inherent in waiting until the primary claims have been litigated to a judgment or settlement is that the transferred assets may be dissipated in the meantime. Ultimately, whether to pursue primary claims and fraudulent transfer claims together or separately requires an exercise of professional judgment and discussion with the client.
Lawyers also should be aware the clients can pursue provisional remedies that are almost unique to cases involving fraudulent transfers, including prejudgment writs of attachment. In the right circumstances, these provisional remedies can be extremely effective.
CUVTA claims often are paired with other legal theories that are directed at reaching assets that have been transferred by the debtor to others. These may include veil piercing, civil conspiracy, aiding and abetting, unjust enrichment and constructive trusts, and others.
Bearing in mind that voidable transactions are almost infinitely varied, the following are some prototypical examples:
- After the plaintiff obtains judgment in a sex assault case, the defendant works closely with the bank that has a lien on his business assets to transfer those assets to a new company nominally owned by his brother but still operated by him. Does the injured party have any potential resident relatives with applicable UM/UIM coverage?
- A defendant in a wrongful death case transfers title to jointly owned real estate to his wife by quit claim deed, reciting nominal consideration of $10, shortly after killing the plaintiff’s husband.
- In the middle of litigation, the defendant sells her house and transfers the sale proceeds to her parents.
- After defrauding the plaintiff, the defendant transfers his stock portfolio to his wife and deeds his interest in real property to a trust created for the benefit of his wife.
CUVTA enumerates 11 traditional “badges of fraud” that judges use to evaluate whether a particular transaction was undertaken with “actual intent to hinder, delay, or defraud” creditors. Examples of the badges of fraud include whether the debtor transferred assets to an “insider;” whether the debtor had been sued or threatened with suit before the transfer; whether the debtor transferred assets in anticipation of incurring a significant debt or shortly after an event giving rise to liability; whether the debtor was insolvent at the time of the asset transfer or rendered himself insolvent by virtue of the transfer; and whether the debtor retained possession or control the assets even after they were transferred.
Not every sale or transfer of an asset is voidable, even when made during litigation. An important question is whether the transaction adversely affected the debtor’s balance sheet and the creditor’s ability to collect on a claim. A debtor’s bona fide, arms-length sale of real property for fair value will not ordinarily be regarded as voidable unto itself, as the debtor is merely exchanging one asset (real property) for another asset of equivalent value (money). Such arms-length asset transfers nonetheless can be part of an overall voidable transaction, as where the debtor transfers the sale proceeds to an insider or applies sale proceeds to buy new property in the name of an insider.
Lawyers who represent defendants as well as transactional lawyers who represent potential debtors also need to be aware of the potential for claims brought under CUVTA. Clients sometimes will ask lawyers what they can do in terms of “asset protection.” The simple answer is that any asset transfer made with the intention of shielding assets from existing creditors and even unknown future creditors is potentially voidable. Moreover, such transactions may expose both the debtor and transferees not only to expensive litigation but also to CUVTA’s enhanced damage remedy. Lawyers have faced disciplinary action and liability for conspiring with or aiding and abetting clients in the transfer of assets with the intent to defraud creditors.
Of course, there are lawful means for clients to limit their exposure to personal liability. Clients should be reminded of the importance of maintaining insurance coverage that is appropriate for their activities and their assets. In addition, clients should transact their businesses through limited liability entities that are reasonably capitalized and operated in a manner that preserves the distinction between entity and individual assets.
