badges
Definition
In legal contexts, 'badges' refers to warning signs or red flags that suggest a transaction or transfer of property might be fraudulent. Courts look at these indicators to decide whether someone tried to hide assets or cheat creditors out of money they are owed. Common badges include things like selling property for way less than it's worth or transferring assets to a family member right before a lawsuit.
Example
If you transfer your business equipment to your spouse the day after getting sued, a court might treat that transfer as fraudulent because the timing is a classic badge of fraud.
Watch Out
Even if you had no bad intentions, multiple badges of fraud appearing together can convince a judge to undo your transactions and hand your assets back to creditors.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.