Fraudulent Debt

If you decide that filing for bankruptcy is the best option for you, you will likely petition to have certain debts discharged. If you are successful in doing this, you will essentially be relieved of responsibility for repaying those debts. However, just because a debt is dischargeable does not mean it will be. Creditors can petition to have discharge requests denied on various grounds, including fraud.

Even if you are found innocent of fraudulent debt, just handling the accusations can interrupt the bankruptcy process and incur additional legal costs. Fortunately, an experienced Arizona bankruptcy lawyer can help you deal with such accusations. For more information, call the Harmon Law Office, LLC at 480-829-0494.

Examples of Fraudulent Debt

Most accusations of fraudulent debt fall into one of two categories:

• Misinformation on a credit application. This occurs when a person lies about his or her income or assets when applying for credit. If that debtor later files for bankruptcy, the creditor will need to demonstrate that the debtor deliberately lied on the credit application. However, even with this evidence, the debt may still be discharged. Today more and more judges are holding creditors responsible for preventing this kind of fraud with thorough background checks.
• Misuse of credit cards. It is considered fraud when a debtor runs up a large amount of credit knowing that he or she will soon file for bankruptcy. This may be an attempt to buy new things, then have the debts discharged. More commonly, it is an attempt to keep minimum payments on credit cards affordable by moving balances to new cards. If you have recently applied for a new line of credit, you should expect inquiries from your creditors if you file for bankruptcy.

If you are worried about accusations of fraudulent debt, the good news is that courts often decide in favor of debtors. This is primarily because creditors need to show that deliberate fraud occurred; there is no such thing as negligent fraud in bankruptcy. However, this is no reason to become overconfident; without a skilled attorney on your side, you are taking real risks with your future.

Contact Us

The Arizona bankruptcy lawyers of the Harmon Law Office, LLC take pride in our effective legal services. Contact us today at 480-829-0494 to learn more about your legal options.