Working With A Great Lawyer

How To Avoid — Or Manage — Presumptive Fraud Before Your Bankruptcy

18 August 2022

Dianne Ellis

If you plan to — or expect you will have to — file bankruptcy in the near future, the moves you make now can either help or hinder the relief you can get. One of these moves is to avoid what may be known as presumptive fraud. What is presumptive fraud? How can you avoid it? And what should you do if you may be accused of it? Here's what every debtor needs to know.

What Is Presumptive Fraud?

Bankruptcy fraud is a serious matter. Not only is bankruptcy a legal matter taken very seriously, but its existence and success rely on delicate cooperation between creditors and debtors. This means that the bankruptcy trustee will actively look for indicators that a filer may have committed accidental or intentional fraud. 

Pre-filing fraud takes two basic forms. The first is an action that may be legitimate or might not be, but which is only revealed as fraud after more investigation. The second is an action that is presumed to be fraud until proven otherwise. 

Two of the most common financial moves which are treated as presumptive fraud are taking out cash advances of more than $750 (in 2022) within 70 days of filing or buying luxury goods on credit within 90 days of filing. 

How Can You Avoid Presumptive Fraud?

The best way to avoid being accused of committing these types of presumptive fraud is not to do them in the first place. The first step is to educate yourself about what is or is not considered presumptive fraud so you don't make these moves. 

What if you already took out a cash advance or bought something which might look bad? Consider the timing of filing your case. Because both of these cases of presumptive fraud depend on a specific time frame, you may be able to delay starting your case until you've exceeded the deadline. This will make it much easier to defend your choices.

Finally, you and your attorney can demonstrate to the court why these moves shouldn't be considered fraud. If you took out a cash advance to pay for necessary bills, for example, your attorney may provide an accounting of what it was spent on. Remember that although these moves are presumed to be intentionally fraudulent, the court can be convinced that they weren't. 

Where Should You Start?

Prevent problems during your bankruptcy case by getting professional legal help long before filing. Meet with a bankruptcy attorney in your state today to learn about presumptive fraud and other pitfalls to avoid. With their help, your case will go smoother and you can start moving forward with your life.

For more information, contact a bankruptcy attorney near you.

Share