November 23, 2015
When you borrow money, be sure you indicate the true purpose. I always make it very clear in all my articles and conversations with my clients that honesty is always the best policy.
Lies can come back to bite you.
In a recent case, a lender objected to the Debtor including a loan in bankruptcy.
The Debtor had borrowed money from a creditor. When the Debtor applied for the loan, the Debtor clearly indicated that the purpose of the loan was for home improvements.
At the meeting of creditors, the Debtor testified that the true purpose of the loan was to open a restaurant. Afterwards, the Debtor said that she was confused on what she said and that the loan for the restaurant came from another source. The creditor asked for proof and the Debtor never supplied any answers to the creditor.
The Court found that the creditor justifiably relied on the Debtor’s misrepresentation because the Debtor had been a long-time customer. This loan could not be discharged in bankruptcy.
You must be honest or it can come back to bite you.