Absconding Debtor

Absconding Debtor

One who absconds from creditors to avoid payment of debts. A debtor who has intentionally concealed himself or herself from creditors, or withdrawn from the reach of their suits, with intent to frustrate their just demands. Such act was formerly an act of bankruptcy.

A person who moves out of the state may be an absconding debtor if it is that person's intention to avoid paying money that he or she owes.

It is difficult or impossible for a creditor to serve an absconding debtor with a summons in order to start a lawsuit and collect his or her money. Where a court is convinced that a debtor has absconded, it may permit the creditor to begin the lawsuit in some way other than Personal Service of a summons.

For example, a franchisee bought a doughnut franchise and opened up a small shop. He also bought a house for his family. Unfortunately, the business failed after a year, and he turned all of the equipment and materials back to the franchisor. The franchisor claimed that additional money was owed to him and decided to sue the former franchisee. A process server was sent to take a summons to the apartment that was listed as the address in the original application for the franchise. The landlord there told the process server that the former franchisee had moved and left no forwarding address. The franchisor applied to the court for permission to serve him as an absconding debtor. The court allowed the franchisor to publish notice of the lawsuit on three occasions in the legal section of the local newspaper. The franchisee did not see the notice and did not appear in court. The court entered a default judgment against him without hearing his side of the story. After that, the franchisor began searching public records to see if the franchisee owned any property that could be seized to pay off the amount of the judgment. He discovered the recorded deed for the house and went back to court, seeking an order to have the house sold. This time the franchisee, who was served personally with the court papers, appeared with his attorney. He explained at the hearing that he had never intended to conceal himself or to avoid paying the money he owed. The court found that he had never been an absconding debtor who could be served merely by publication. The default judgment, therefore, could not be enforced, and the franchisor could not have the house seized and sold.

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The moneylenders' tentacles are so widely spread out that they can reach any corner of any country and track down absconding debtors or their families.
20) See: Creditors Relief Act, supra note 18; Garnishee Act, RSNB 1973, c G-2; Arrest and Examinations Act, RSNB 1973, c A-12; PPSA, supra note 16; Assignments and Preferences Act, RSNB 2011, c 115; Absconding Debtors Act, RSNB 2011, c 100; Memorials and Executions Act, RSNB 1973, c M-9; Land Titles Act, RSNB 1973, c L-1.
59) There appear to be less than l0 reported decisions dealing with the Absconding Debtors Act.
The main purpose of bankruptcy law was to recover property from absconding debtors for the benefit of creditors and provide for equal sharing from the estate.