Insights

What will be the consequences of Ningbo's false divorce and anti-fraud lawsuits to avoid debts?

Ningbo Author：LuXu WANG

Ningbo has a vibrant economy, with frequent private lending, real estate transactions, and business dealings within family enterprises. As a result, it is not uncommon for individuals burdened by debt to consider “sham divorces” or filing “fake lawsuits.” Some people believe that by transferring their house, car, and savings into their spouse’s name and then colluding with others to file a lawsuit to “legitimize” the debt, they can clear their own name and make it impossible for creditors to pursue them further. To state the conclusion clearly: so-called “sham divorces” are, under the law, genuine divorces that take effect upon registration; if a divorce agreement transfers all major assets to one party while assigning all debts to the other, thereby harming the interests of creditors, that property division provision may be revoked by the court at any time. As for the "anti-counterfeiting lawsuit", once verified, the litigation request will be rejected, the property will be returned, and the original state will be restored, and the worst will be fined, detained, and included in the list of dishonesty, until the crime of false litigation and refusal to execute the judgment will be investigated for criminal responsibility. Trying to evade debt with this scheme won’t work; you might even drag your spouse, relatives and friends, and even your lawyer into the mess.

1. What are the common types of "false"?

In practice, there are roughly five types of tactics used to evade debt.

  • Fake divorce to evade debt. When burdened by debt, some individuals hastily file for a “flash divorce” just before creditors initiate legal action. In the divorce agreement, nearly all assets—such as real estate, equity interests, vehicles, and bank deposits—are assigned to one party, leaving the other with nothing; the latter then publicly claims to have already divorced and that the assets are no longer their responsibility. When the creditor comes to the door, the judgment debtor’s bank account is empty, yet their spouse has substantial assets.
  • Confirmation of rights through a fraudulent lawsuit. Colluding with others, one party initiates a lawsuit as the “creditor,” using litigation and mediation to formalize non-existent debts or rights, then relies on the final court documents to participate in asset distribution, oppose the true creditors, or, through the court’s intervention, transfer property “legally.”
  • False debt. To circumvent divorce asset division or enforcement proceedings, individuals may hastily produce promissory notes or loan agreements, even backdating them and fabricating bank statements to create fictitious debts amounting to hundreds of thousands or even millions, with the aim of reducing their spouse’s share of the marital assets or allowing creditors to seize the judgment debtor’s property while keeping it under their own de facto control.
  • Sham gift to transfer assets. Transferring real estate or vehicles to parents, children, or siblings without compensation, or “selling” them at a significantly below-market price to family members, in order to create the false appearance of having no assets. Such gratuitous or low-priced dispositions are precisely the primary targets of creditors’ right of rescission.
  • Falsifying debts to the detriment of a spouse. In divorce proceedings, one party suddenly produces a large loan agreement, claiming it constitutes joint marital debt and demanding that the other party share liability, thereby reducing the portion of assets the other party is entitled to or pressuring them to make concessions in the division of property.

2. "Sham divorce" is a real divorce under the law.

The biggest misconception many people have about “sham divorce” is that as long as both parties privately agree it’s just for show, the law will still allow them to “undo” it. That is not the case. Both divorce and marriage are formal acts; once a divorce registration is completed at the marriage registry and a divorce certificate is issued, the divorce takes legal effect immediately, and the marital relationship is thereby dissolved. Whether there is an oral agreement to "remarry" does not affect the fact that the divorce has taken effect; one party later repents and refuses to remarry, and the other party requests the restoration of the marriage relationship on the grounds that "the original agreement was false". The court will not support it, because the freedom of marriage itself It includes the freedom not to remarry.

The main points of contention are the provisions in the divorce agreement regarding property and debts. In principle, as long as the agreement reflects the genuine intentions of both parties and does not violate any mandatory provisions, the divorce agreement’s stipulations regarding property division and debt settlement shall be valid, and both parties are obligated to comply. However, this does not mean that the property arrangements made through a “sham divorce” are necessarily secure. Article 146 of the Civil Code provides that a civil legal act entered into by a party and the other party through a false expression of intent is void; the validity of any act concealed by such a false expression of intent shall be determined in accordance with the relevant provisions of law. In other words, if it is determined that the parties did not genuinely intend to divide their joint property, and the so‑called “divorce‑related property division” was merely intended to circumvent purchase restrictions, transfer assets, or evade debts, then such an agreement may be deemed ineffective on the grounds of collusive fictitious representation. Moreover, a divorce agreement only governs the relationship between the spouses and does not bind external creditors.

3. Civil liability for false litigation

The primary civil consequence of a false lawsuit is that the act itself has no legal effect. Article 146 of the Civil Code provides that a fictitious expression of intent entered into by mutual agreement is void; Article 154 provides that a civil legal act whereby the actor and the other party collude in bad faith to the detriment of the legitimate rights and interests of others is void. Property obtained through an invalid act shall be returned; if it cannot or does not need to be returned, the party shall provide monetary compensation. The party at fault shall also compensate the other party for any losses incurred.

What is more favorable to creditors is the right of rescission. Article 538 of the Civil Code stipulates that if the debtor disposes of property rights and interests without compensation by giving up creditor's rights, giving up creditor's rights guarantee, transferring property without compensation, or maliciously extending the performance period of due creditor's rights, the creditor may request the court to revoke it; Article 539 stipulates that the debtor transfers property at an obviously unreasonable low price, transfects other people's property at an obviously unreasonable high price, or provides security for other people's debts, Affect the realization of creditor's rights, if the counterparty knew or should have known of the situation, the creditor may also request avoidance. The scope of revocation is limited to the creditor’s rights. In terms of time, the right of revocation shall be exercised within one year from the date when the creditor knew or should have known of the grounds for revocation; if it is not exercised within five years from the date on which the act was performed, the right of revocation shall lapse.

Divorce as a means of evading debt is precisely a typical scenario for the exercise of the right of rescission. A dispute over the right of revocation of creditors heard by the People's Court of Wen 'an County in Hebei Province can explain the problem: the debtor Xing Moumou owed a large amount of debt to the creditor Wu Moumou, but he and his wife Xie Moumou mediated the divorce in Bazhou People's Court. The second item of the mediation agreement agreed that the two properties registered in Xing Moumou's name should be owned by Xie Moumou, and also stated that "other properties should be owned by Xing Moumou". The court found that, in addition to the two properties covered by the mediation agreement, there remained real estate registered under Xie’s name that had not been divided; moreover, the so‑called “other property” consisted merely of clothing and personal belongings. The court found that Xing Moumou transferred the joint property of the husband and wife under his name to Xie Moumou free of charge when the debt was not paid off, and some of the joint property under Xie Moumou's name was not divided and was still in his possession free of charge, which affected the realization of the creditor's claim and constituted a free transfer of property. Therefore, it was decided to revoke the second item of the mediation agreement on the treatment of the joint property of the husband and wife and wife, and wife, and wife, and wife.

If the "fake" happens between husband and wife, for example, if one party forges debts to make the spouse share less and occupy more by himself, Article 1092 of the Civil Code stipulates that if one of the spouses hides, transfers, sells, destroys or squanders the common property of the husband and wife, or forges the joint debts of the husband and wife in an attempt to occupy the property of the other party, the party can divide the common property by less or not; if the other party discovers it only after the divorce, he may sue separately and request another division. Article 3 of the interpretation (II) for marriage and family also makes it clear that if creditors have evidence to prove that the property division clause in the divorce agreement affects the realization of their creditor's rights, they may request to revoke the relevant clauses by reference to Article 538 or Article 539, and the court will deal with the factors such as property division, child support and divorce fault according to law.

Judicial Sanction 4. False Litigation

The civil liability is just "spit out what should not be taken", while the judicial sanction is directly against the person. Article 115 of the Civil Procedure Law stipulates that if the parties maliciously collude in an attempt to infringe upon the national interests, social public interests or the legitimate rights and interests of others through litigation, mediation, etc., the court shall reject the request and impose a fine according to the seriousness of the circumstances., Detention; if a crime is constituted, criminal responsibility shall be investigated according to law. This provision also stipulates that if a party unilaterally fabricates the basic facts of a civil case and brings a lawsuit with the intent to infringe upon the aforementioned interests, the same rules shall apply.

The intensity of fines and detention is not light. In accordance with Article 118 of the Civil Procedure Law, the fine for individuals shall not exceed RMB 100,000, and the fine for organizations shall be no less than RMB 50,000 and no more than RMB 1,000,000; the period of detention shall not exceed fifteen days. If the person subject to execution colludes with others to evade execution and evades the obligations specified in the effective legal documents through litigation, arbitration, mediation, etc., Article 116 also stipulates that fines and detention may be imposed.

In addition, there are credit and qualification consequences: participants in false litigation may be included in the list of untrustworthy persons subject to enforcement, subject to punishments such as restrictions on high consumption, restrictions on flying high-speed rail, restrictions on exit, etc., and restrictions on financing, bidding, and serving as company executives. The most serious is criminal responsibility-the crime of false litigation stipulated in Article 107 of the Criminal Law. If a civil lawsuit is filed with fabricated facts, obstructing judicial order or seriously infringing on the legitimate rights and interests of others, he shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention or surveillance, and a fine or a fine; if the circumstances are serious, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and a fine. Whoever takes advantage of a false lawsuit to illegally occupy another person's property or evade a lawful debt, which constitutes another crime, shall be convicted and given a heavier punishment in accordance with the provisions on heavier punishment.

5. Special charges for evading enforcement

hiding debts mostly occurs at the node of "owing money" or "having been sentenced". At this time, besides the crime of false litigation, there are two crimes focusing on this kind of behavior.

One of them is to refuse to execute the judgment and to rule on the crime. Article 313 of the Criminal Law stipulates that if a people's court is capable of executing a judgment or ruling but refuses to execute it, if the circumstances are serious, he shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention or a fine; if the circumstances are especially serious, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined. Many people mistakenly believe that “transferring one’s assets before a judgment takes effect means it doesn’t constitute contempt of court,” but this is incorrect. According to the judicial interpretation of the two high courts on handling criminal cases of refusal to execute, the behavior of the perpetrator, such as hiding or transferring property, occurred after the start of the litigation and before the judgment came into effect, and it was verified that it was required to execute after the judgment came into effect but refused to execute, and the circumstances were serious, so as to investigate the criminal responsibility. In other words, from the moment the creditor sues, your move to transfer property has entered the judicial field of view.

The second is the crime of illegally disposing the sealed-up, seized and frozen property. Article 314 of the Criminal Law stipulates that whoever conceals, transfers, sells or intentionally damages property that has been sealed up, detained or frozen by judicial organs shall, if the circumstances are serious, be sentenced to fixed-term imprisonment of not more than three years, criminal detention or a fine. Some people think that the house and equipment can be sold and transferred secretly after being sealed. Once verified, they may commit the crime of refusing to execute and the crime at the same time. The court will deal with it according to the provisions of heavier punishment.

Risk of 6. an accomplice

evading debts and making fake is rarely accomplished by one person, and it is often necessary to pull in spouses, relatives, friends and even intermediaries. Special reminder: Those who assist are not “bystanders,” but co-perpetrators.

The most typical is that relatives and friends issue false IOUs and forge loan evidence. The first paragraph of Article 207 of the Criminal Law stipulates the crime of obstructing testimony, and anyone who uses violence, threats, bribery, etc. to prevent witnesses from testifying or order others to give false testimony shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention; if the circumstances are serious, he shall be sentenced to fixed-term imprisonment of not less than three years and not more than seven years; the second paragraph provides for the crime of helping to destroy or falsifying evidence, and falsifying. Issuing a false debit note for someone, helping someone forge a running water, making a false statement in court, or appearing in court for perjury may all be subject to criminal liability. In practice, in order to help friends "round" false debt, transfer through the scene, forged IOUs, collusion, the last case was convicted of a common occurrence.

The intermediaries and agents involved in the fraud are equally dangerous. Article 106 of the Criminal Law specifically targets defenders and agents ad litem: whoever destroys or falsifies evidence in criminal proceedings, helps the parties destroy or falsify evidence, threatens or induces witnesses to change their testimony or give false testimony in violation of facts, shall be sentenced to fixed-term imprisonment of not more than three years Or criminal detention; if the circumstances are serious, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years. Although this article is limited to criminal proceedings, civil and commercial lawyers who knowingly give advice, help to forge evidence, or instigate others to give false testimony may also constitute accomplices in the crime of false litigation, the crime of obstructing testimony, or the crime of helping to forge evidence, and their qualifications are also difficult to guarantee. The so-called "running errands" intermediary, knowing that the fraud is still involved, it is difficult to use "just to do a favor" to get out.

How does the 7. court identify

The flaws in a false lawsuit are often quite concentrated, and judges as well as the opposing party can usually detect them.

  • Abnormal flow of funds. False loans often have no real financial transactions, or are manifested as "fast in and fast out", "the same day of transfer to the same day of withdrawal", "the same money repeatedly turn several times to offset multiple debts", the lender and the borrower's account to form a closed loop.
  • Transfer between relatives. The plaintiff and defendant are relatives, romantic partners, classmates, colleagues, or business associates; yet the lender cannot clearly explain the source of funds for loans amounting to hundreds of thousands, or even millions, and often avoids verification by claiming that the funds were delivered in cash, which greatly undermines their credibility.
  • The coincidence of the litigation timing. As soon as the debt dispute is filed, the divorce lawsuit is settled by mediation at an alarming rate; the division of property is reached and a mediation statement is issued on the day of filing the case; as soon as the execution starts, the "creditor" comes to sue... The more "just right" the time point is, the more suspicious it is.
  • Defects in IOUs. A promissory note printed on brand-new paper yet dated to a loan made several years ago; consistent ink color and handwriting; an exact-amount figure with no decimal places; the absence of any bank transfer records; a retroactively dated signature—all of these could serve as potential leads.
  • The "tacit understanding" of the proceedings ". The plaintiff and the defendant do not argue, admit the unfavorable facts, easily mediate and close the case, do not appeal after the judgment, and even the same agent appears on both sides at the same time, which are common "performance" traces of false litigation.

Because of this, the court will take the initiative to examine whether there is a false lawsuit in the trial, strengthen the verification of evidence for suspicious cases, obtain water, summon the parties themselves to the court to explain, and transfer to the public security organ when necessary. Want to muddle through, the difficulty is much greater than imagined.

8. the right way to deal with debt

Instead of trying to hide from debt, it is better to use your strength on the right path.When debt is ridden, there are at least these legal and viable ways out.

  • Negotiate staging. Take the initiative to communicate with creditors, explain practical difficulties, strive to extend the repayment period, repay in installments, reduce part of the interest or default, and sign a written agreement. Many creditors would rather get most of their principal back than get caught up in a long execution tug-of-war.
  • Go through bankruptcy or debt liquidation procedures in accordance with the law. If an enterprise is insolvent or unable to pay off its due debts, it can apply for reorganization or liquidation according to the enterprise bankruptcy law, and pay off part of the debts fairly through legal procedures and exempt them according to law. Although there are only a few areas where individuals are currently piloting personal bankruptcy or centralized debt liquidation, those who meet the conditions can still negotiate a settlement with their creditors and avoid "false" settlements.
  • Declare assets truthfully. After entering the enforcement procedure, truthfully report the property to the court, cooperate with the enforcement, take the initiative to perform or propose a feasible implementation plan. Those who are capable of fulfilling their obligations and actively do so often stand a better chance of receiving lenient treatment; concealing or transferring assets will only push one closer to being charged with the crime of refusing to enforce a court order.
  • Seek professional help. For debts involving large amounts and complex relationships, professional legal professionals can be consulted to sort out the nature of the debt (personal debt or joint debt, whether it has exceeded the statute of limitations, whether there is a guarantee, etc.) and reduce the burden through legal means, rather than by illegal means.

class case reference: in the case of property dispute after the divorce between Zhang mou 1 and Shen mou, both parties handled a false divorce in order to obtain bank loan. the court found that the divorce agreement was a false expression of intention and invalid, which had no binding force on both parties, and rejected the plaintiff's claim for payment from the other party. It is evident that agreements executed for the purpose of “fake divorce” to evade debt may be deemed invalid, thereby failing to achieve the intended objectives of transferring assets and evading liabilities. Trial Court: Haishu District People’s Court of Ningbo City, Zhejiang Province Case No.: (2018) Zhe 02

03Min Chu 15723

9. Frequently Asked Questions

Question: We went through a “sham divorce,” but the other party has gone back on their word and refuses to remarry. Can I reclaim the property that was divided?

Answer: Whether to remarry or not is the freedom of the other party, and the law will not force remarriage. However, if there is evidence demonstrating that the parties did not genuinely intend to divide their property—for example, if they entered into a sham marriage or divorce solely to circumvent purchase restrictions or to secure a debt—such an agreement regarding property may be deemed a collusive and fictitious expression of intent and thus invalid, allowing the party to seek the return of the property or to assert other rights. The key lies in the evidence.

Question: My partner and I have agreed to use a “sham divorce” to evade debt—wouldn’t that at most be considered a civil dispute?

A: Not necessarily. Only if the two parties collude to divorce and harm the interests of creditors, creditors can remedy through civil means such as the right of revocation; however, if they forge debts, collude to fight fake lawsuits, and forge evidence at the same time, they may commit the crime of false litigation, the crime of obstructing testimony, etc., and the nature is upgraded from civil to criminal.

Q: Can the creditor revoke the divorce agreement if he doesn't know the specific content of our divorce agreement?

A: Yes. As long as it is found that the debtor has transferred property through divorce and affected the realization of his claim, the creditor may sue for the avoidance of the relevant property division clause. The right of revocation shall be exercised within one year from the date on which the cause of revocation is known or should be known, and no later than five years from the date on which the act occurs.

Question: I just signed a fake note for my friend. Is it a crime?

A: There are risks. Assisting a party in fabricating evidence under serious circumstances may constitute the crime of aiding in the fabrication of evidence; instructing others to give false testimony or to make false statements in court may constitute the crime of obstructing testimony. Out of "human feelings" and "face" to help, and not exempt.

Question: After a “sham divorce,” can creditors still enforce execution against property registered under the former spouse’s name?

Answer: Yes. The property provisions in a divorce agreement do not have any binding effect on creditors. Creditors may apply for enforcement of property belonging to the debtor's share, or they may apply for enforcement of property restored to the debtor or in a common state after the relevant property division clause has been revoked.

question: have you fought a fake lawsuit and obtained the mediation document, is there any room for remedy?

Answer: The sooner you cut your losses, the better. Can take the initiative to withdraw, truthfully explain to the court, apply for retrial or supervision; if it has been transferred, take the initiative to return the stolen goods, truthfully confess, and strive for understanding, usually in sentencing lighter. Concealing the truth will only make the consequences worse.

10. Practical Legal Insights

When faced with debt pressure, the first instinct of many individuals is often to “transfer their assets and get a divorce” as quickly as possible. This kind of thinking must be stopped cold before taking any action. The experience of handling the case has repeatedly proved that after receiving a divorce certificate from the Civil Affairs Bureau, a "fake divorce" is a real divorce in law. After the event, one party refuses to remarry and the other party has no right to ask for restoration. However, the divorce agreement, which gives almost all the property and savings to one party and leaves all the debts to the other party, is precisely the object that creditors are most likely to apply for cancellation. In other words, not only do you fail to avoid the debt, but you may also drag your spouse, who has already been left with nothing, back into it—making the whole situation a poor trade-off.

If it has been targeted by creditors or even entered into the execution procedure, the correct approach is not to continue to create false appearances, but to return to the real debt treatment track as soon as possible: to sort out the property, income and liabilities under the name of the truth, negotiate with creditors for installments, reconciliation or provide real guarantees, and seek a way out through proper debt liquidation procedures when necessary. These real paths seem slow, but they preserve credit and personal freedom, and they don't involve families. At the same time, we should be especially vigilant against being encouraged by intermediaries or others to "fight fake lawsuits" and "supplement IOUs". Once such operations are verified, fines, detention, dishonesty and even criminal accountability will follow one after another, and relatives, friends and even lawyers who help may also be implicated.

From the perspective of the other party or the creditor, the focus of practice is to fix the fictional traces, rather than to accept the fate. Whether the traces of common life and common operation are suddenly erased by a debit note, whether the large debit note has the corresponding capital flow, whether the transfer is closed-loop between related accounts, whether the time is concentrated, and whether the property disposition obviously deviates from common sense, these are all the starting points that can be checked and proved. When dealing with marital problems, it is also necessary to write clearly the attribution of the debt in the agreement or litigation, so as to avoid being implicated by the other party's "arrears" in the future. In short, there is no safe way out when it comes to evading debt; focusing your energy on genuinely resolving your debts and protecting yourself and your family is the most sensible choice.

"fake divorce" is a real divorce in law, and the "fake" agreed in private cannot resist the effect of registration; once the property arrangement in the divorce agreement is identified as a conspiracy to hypocritical expression or free transfer of property, it will be invalid or revoked by the creditor. "Fake lawsuits" are even more high-risk actions. From rejection of requests, fines and detention, to punishment for dishonesty, false litigation, and refusal to execute, the consequences are aggravated, and the relatives and friends who help will be affected.

Three suggestions are given to the parties in debt distress: First, don't use the idea of "fake", and focus on legal paths such as negotiation, installment, bankruptcy or debt liquidation; Second, for the signed divorce agreement, IOU and mediation letter, find professionals to assess the risks as soon as possible, correct those that can be corrected as soon as possible, and stop those that can be stopped as soon as possible; Third, in the face of enforcement and creditors, honesty works better than "cleverness", and hiding and transferring property is often severely punished.