People trying to avoid judgment creditors often try to convert assets to cash and plan to hide the cash from discovery. Clients have told me from time to time about very creative strategies to hold and spend cash off the books.
The reality is that it is very difficult to hide cash from creditors. It is not usually a recommended strategy.
There is nothing illegal about a judgment debtor using cash. However, the same debtor will commit a crime if he denies having such a card when a creditor examines him under oath about his assets. Therefore, for this cash hiding strategy to work the debtor probably has to lie about it at some point in the judgment collection process.
A creditor will ask the debtor to reveal any and all assets, whether or not specifically identified by the creditor’s attorney. Although many people will think it’s impossible for a creditor to discover cash, cash cards, and similar cash tools, there are always witnesses to the purchase and use of a cash card.
A skilled creditor attorney or his investigators may find evidence of cash purchases. Another issue is that people become tempted to use this same tactic to hide cash income from the IRS. Asset protection is not unlawful, but tax evasion is a serious crime.
From my clients reports I know that people are using cash cards to hide assets. I am wary of any asset protection tool that involves hiding assets because I do not think there are any more secrets in today’s world. There are enough legal asset protection tools in Florida that people can effectively protect their assets without having to hide or lie about what they own.
