Victim of check scam

[Freshstart88]

I filed a no asset, chapter 7 case a few days ago. I have around 250k unsecured debt.

I am very concerned about one of my specific debts because it’s a highly unusual situation and I think they may file a AP against me. The creditor is Alliant credit union for a total of 49k. This was the result of a check scam and resulted in a checking account being negative 49k because of the reversed check. This happened around 16 months ago. I filed a case with the federal trade commission but never heard anything back. I discussed the situation with the bank and informed them of the fraud/scam and they said unfortunately I was responsible for the debt. I have not heard anything from them since that happened 16 months ago. Now that I’m filing is it highly likely they will show up and dispute the discharge? Has anyone ever dealt with any sort or scam/fraud situation in bk before?? Thank you!!!

[justbroke]

I've never dealt with this. The exception, however, is in 11 USC 523(a)(2)(A) which covers property obtained by fraud, false pretenses, or false representation. Fraud is difficult to prove and the creditor would, as you imagined, need to file an Adversary Proceeding/Complaint (AP) to determine the dischargeability of the debt. You are likely responsible for the debt because it seems that you used the money. But if you file bankruptcy, it is quite possible that the debt is dischargeable. Again, they'd have to prove that it meets those three conditions and they'd need to file an AP.

Generally speaking, an overdrafted checking account is dischargeable. My checking account was overdrawn due to some weird thing with my overdraft line of credit and the bankruptcy discharged the debt.

It's interesting that they haven't pursued criminal fraud charges and that may speak volumes to whether or not they believe that you did this through false pretenses or actual fraud.

Bottom line: you need a good bankruptcy attorney and you need to let them know everything. Including whether or not you had an inkling that the check was bad before you deposited the check. They would be able to help guide you through any potential AP.

[Freshstart88]

justbroke Thank you so much for responding. I discussed this with my attorney and I was shocked at how unbothered she was by the situation. She thought it was kind of strange but she didn’t think I’d have any issues with my bankruptcy in general. She has a great reputation and has been a bk attorney for many years. I trust her but I was just really surprised that she didn’t seem worried at all (which I suppose is a good thing).

But I just have this nagging worry that something bad could result from it . What is the very worst possible scenario for me? My biggest fear is Jail time. It would suck to pay the money back but I would much rather that then any possibility of jail. I have some proof of the scammer through texts and emails so that may help my case. But I’m terrified. Do you think it would benefit me to call the Credit Union now that I’ve filed and talk with them and give them all the info on my case? Any ideas on anything I can do to help minimize any bad situations that can come from this. I’m just so scared!

[justbroke]

The worse possible scenario? First, that they file an adversary proceeding. Second, that they try to prove fraud. Finally, that the judge believes that you committed the fraud. That means the debt would be non-dischargeable and you'd have to pay it back.

Like me, your attorney is thinking this is a nothing-burger because your bank hasn't attempted to file actual criminal fraud charges against you. From what you have written, they've only employed traditional collection tactics--of which they are entitled to do because you do owe them. Since there are no criminal charges, then how could you go to jail? You would not. That's probably why the bank hasn't filed any criminal charges.

Don't talk to your bank. Only talk to your bankruptcy attorney. Do not stir the pot. Additionally, you have filed bankruptcy. They can't talk to you... and they shouldn't talk to you. If they choose to file an adversary proceeding/complaint then so be it. They'd have to prove fraud and that's a high hurdle. Your attorney seems to think they won't file. Even if they do they'd still need to prove this.

So, don't get ahead of yourself. Let the bankruptcy travel its normal path. Should they file an AP your attorney will sit down with you and go over the options to defend the AP.

[Freshstart88]

justbroke okay this made me feel a lot better, thank you so much!!!!