Legal Question in Bankruptcy in California

Re: bankruptcy ch. 7 possible fraud...HELP!

There are a lot of issues here. First, the cash-advance right before filing bankruptcy is really an issue between the debtor and the creditor. If the cash advance was taken just prior to filing, the creditor can file an action to have their debt declared non-dischargeable. That, however, in and of itself does not make the filing fraudulent.

Second, is the bankruptcy filing fraudulent for other reasons? There are a lot of factors - did the debtor list all assets and all debts? Is the debtor truly insolvent? Did the debtor provide accurate information (i.e., the value of the business and other assets)? There are a lot of factors to look at. One word of advice - hire a bankruptcy attorney to review the case for you and determine if there is any action you can take as an individual to object to the discharge of the debtor. You may also wish to contact the US Trustee's office and/or the Trustee assigned to the case IF you have verifiable evidence of inappropriate use of the bankruptcy laws on the part of the debtor.

Finally, I take it you sold the business and carried back the $245,000. You need to review with an attorney the specifics of that transaction - your debt may be secured, and therefore possibly not discharged in bankruptcy. You also need to look at the question of dischargeability of your loan. Again, there is too much to cover in this reply. Please feel free to email me as we often work with individuals and businesses in reviewing cases to determine if any grounds exist to either protect a creditor or to have the case dismissed or a discharge denied.

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