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Bankruptcy Fraud: What It Is and How You Can Avoid Accusations of It

Fraud is one of the primary reasons bankruptcies are denied. If the court suspects you have hidden assets or you’ve done anything else that would indicate you are not being 100 percent honest about your financial situation, it can dismiss your request for bankruptcy without discharging your debts. And, as many filers have found out the hard way, a denial can occur even if a mistake was unintentional.

One of the primary reasons accusations of fraud arise is because a creditor calls a debt into question.

In some cases, the action in question likely occurred before any attempt to file for bankruptcy was made. For instance, if a credit card lender alleges you obtained your card using false information, the discharge of that debt could be denied in your bankruptcy.

Keep in mind, more than just accusations are needed to get your bankruptcy request denied. Simply claiming fraud occurred is not enough and the creditor will need to take further legal action in the form of filing an adversary proceeding within a certain time frame and prove that the fraud accusation is legitimate. However, defending yourself against accusations of fraud is stressful and if done incorrectly, can result in a denial even if you tried to do everything right.

How a Judge Determines Fraud

There are several factors that can indicate fraud. Some of the things a judge will consider when determining if fraud is present include:

  • How long it was between when the debt was incurred and the bankruptcy filing
  • Whether you met with an attorney about bankruptcy before incurring the debt
  • Amount and number of the charges and whether they were within the limit of the credit account
  • Your financial status at the time the debt was incurred
  • Whether multiple charges were made on the same day
  • Whether you were employed at the time the debt was incurred
  • Whether the debt included an overall change in your spending habits
  • Whether the items purchased were necessities or luxury items

It’s important to remember this is not an all-encompassing list, so just because none of the above factors applies to the debt in question in your case doesn’t mean you cannot be accused of fraud.

In addition to an overall assessment of your situation, there are also specific concrete factors that can result in a debt not being discharged, even without a specific intent to commit fraud. These guidelines are in place to prevent fraud.

For instance, certain debts are non-dischargeable if the money was spent on luxury items or services within 90 days of filing for bankruptcy, or on any cash advance of more than $875 within 70 days of filing.

For more specific information on what constitutes bankruptcy fraud, check out Cornell University’s Law School website.

A Bankruptcy Attorney Can Help You Deal with Accusations of Fraud

Working with a bankruptcy attorney can not only help you avoid accusations of fraud, it can also help you rebut any accusations. A creditor can call a perfectly legitimate and dischargeable debt into question, but a good lawyer will ensure the accusations don’t stick and the debt is included in your bankruptcy. An experienced bankruptcy attorney will also help you protect your overall bankruptcy case, even if there is an issue with a specific debt.

For more information or to schedule a consultation to discuss your debt, contact the Law Office of Robert M. Geller at 813.254.5696.

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At the Tampa Bay law firm, the Law Offices of Robert M. Geller, P.A., we help people with consumer bankruptcy matters in the Tampa Bay-St. Petersburg,  Florida communities such as Clearwater,     St. Petersburg, Tampa, Thonotosassa, Riverview, Lutz, Plant City, Brandon, Carrollwood, Wesley Chapel, St. Petersburg Beach, Lakeland, Mulberry, Dade City, Pinellas Park, Largo, Seminole, Odessa, Oldsmar and Lithia, and counties such as Hillsborough County, Pinellas County, Pasco County, Polk County and Manatee County.