QUESTION
Can fraud be discharged from bankruptcy court if there was no intent to commit fraud?
Asked on Jun 10th, 2014 on Bankruptcy - Georgia
12 ANSWERS
Bankruptcy Attorney serving Grand Rapids, MI
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David Andersen & Associates, PC
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Debt alleged to have been fraudulent can be filed on in a bankruptcy; however, the creditor could file an adversary complaint (a lawsuit within the bankruptcy) to allege the debt was fraudulent and shouldn't be discharged (meaning you don't get rid of it). You'll want to talk to an experienced bankruptcy attorney about the particulars of your case.
Answered on Jun 12th, 2014 at 8:14 PM
The bankruptcy court doesn't care whether or not you intended to commit fraud if you acted in a fraudulent way within the time period indicated in 11 USC section 523. See my video on uTube called the five things you must never do if you want to file bankruptcy for more information.
Answered on Jun 12th, 2014 at 8:14 PM
bankruptcy Attorney serving Paul, ID
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Paul N. J. Ross Law, PLLC
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It depends. The debt will be discharged unless the creditor brings a non-dischargeability action and can prove the elements of fraud.
Answered on Jun 12th, 2014 at 8:14 PM
2 Awards
Fraud is not accidental. If a court has a judgment of fraud there had to be intent in the finding. If it is fraud it is most likely not dischargeable.
Answered on Jun 12th, 2014 at 8:14 PM
Bankruptcy Law Attorney serving Livingston, NJ
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Law Office of Stuart M. Nachbar, P.C.
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It truly depends on the fraud and the circumstances. It is a fact specific question, and will probably be determined by a hearing.
Answered on Jun 12th, 2014 at 8:14 PM
Well, you cannot commit fraud if you did not intend to defraud anybody. An element of fraud is the mental intent to willfully deceive somebody.
Answered on Jun 12th, 2014 at 8:13 PM
Deborah F. Bowinski
The creditor has a right to file what is called an adversary proceeding in the bankruptcy court. It is in reality, a separate lawsuit within the bankruptcy court in which the creditor hopes to prove that there was fraud involved in incurring the debt. If the bankruptcy judge agrees, then the debt will be determined to be non-dischargeable. Additionally, if there has already been a ruling in a state court proceeding that a debt is fraudulent in nature that will very likely be given credence and weight in the bankruptcy case when the creditor files an adversary complaint. If you are served with papers for an adversary complaint within a bankruptcy case it is time to seek assistance and hire a lawyer - defending them involves real litigation, evidence, witnesses, discovery, and legal strategy.
Answered on Jun 12th, 2014 at 8:13 PM
"Fraud" is a legal conclusion decided by a Judge. If you file BK, the creditor can file an Adversary Proceeding for a court determination that the debt is non-dischargeable because it was incurred by fraud. Fraud claims are very hard to prove, and expensive for the creditor. Normally those get resolved outside of court, for pennies on the dollar. Contact not only a BK lawyer, but a lawyer who handles litigation.
Answered on Jun 12th, 2014 at 8:13 PM
This is a very difficult issue to litigate as a debtor, because the bankruptcy court uses a lower standard of proof (preponderance of evidence) rather than the "clear and convincing" standard used in criminal cases. So even if you were not found guilty in a criminal case, you cannot be sure the bankruptcy judge will come to the same conclusion. Most debtors do not have the funds to litigate, either, so if it is likely that a creditor will challenge the discharge of a debt on account of fraud, it is probably advisable to attempt to settle the matter without a trial.
Answered on Jun 12th, 2014 at 8:13 PM
Bankruptcy Attorney serving Walnut Creek, CA
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Alan E. Ramos Law Offices
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Fraud is non-dischargeable in bankruptcy, if proven. To prove fraud, one must prove intent. You should speak with an attorney to determine if the elements of fraud can be proven.
Answered on Jun 12th, 2014 at 8:13 PM
Consumer Bankruptcy Attorney serving Los Angeles, CA
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Orantes Law Firm
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If a Court already adjudged that a debt was incurred through fraud, a creditor can come into bankruptcy court and ask the Court to rule that such debt is nondischargeable and will likely prevail. However, if no Court has decreed that fraud was committed, the creditor would have to come into bankruptcy court to get a ruling from the Bankruptcy court and intent is the biggest factor as to whether the debt is dischargeable. If the creditor cannot prove intent, the Court should rule that it's dischargeable.
Answered on Jun 12th, 2014 at 4:23 PM
William Rhymer
It depends on whether there is proof, whether another court specifically ruled there was in fact fraud as defined by the bankruptcy code and whether the creditor wants to fight the discharge. It would be best to talk with a bankruptcy attorney in person and let him or her advise you after hearing the details.
Answered on Jun 12th, 2014 at 4:22 PM