How best to fighting a debt owed from fraud during a bankrupcy?

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How best to fighting a debt owed from fraud during a bankrupcy?

I loaned a person $1.4 million for a business purchase. They made 2 payments, then filed bankrupcy. This business was mostly proprietary technics and trade secrets. As soon as they learned the information, that’s when they stopped making payments and filed bankrupcy. We are fighting them trying to get the debt to us non-dischargable but I am hearing a lot of people saying, you can never win those. Also, they are still running the business and making money from it. I know you would probably like to know more but what is your take on this?

Asked on May 14, 2012 under Bankruptcy Law, Indiana

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

From what you have written, the best way to prevent the discharge of the loan that you made is through an adversary complaint with respect to the debtor's filed bankruptcy. Given the $1,400,000 at risk, it is best to have an experienced attorney representing you to prove that the debtor's intended to defraud you concerning the loan that you made where only two payments were made.

Under bankruptcy law, one who defrauds another person is precluded from having the debt discharged based upon public policy grounds. Good evidence of the fraud is that only two payments on the loan were made before the bankruptcy was filed. Your ability to win your matter will rest upon your ability to prove an intent to never repay the loan, i.e. fraud.


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