Courts occasionally create equitable mortgages to protect creditors.

Question

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Courts may create an equitable mortgage to protect the interests of creditors in certain situations, such as when a debtor transfers property to a third party in an attempt to avoid payment of a debt. The equitable mortgage gives the creditor a security interest in the property, similar to a traditional mortgage, even though no formal mortgage agreement was entered into.

Courts Occasionally Create Equitable Mortgages to Protect Creditors