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I'm scared - I took out a loan last year from Upstart and lied on the application

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    Question I'm scared - I took out a loan last year from Upstart and lied on the application

    So for my chapter 7 I have nine credit cards equaling about 80k and two personal loans. All the credit cards I'm not worried about, nor am I worried about one personal loan I had been making payments for over a year. But, this Upstart loan I'm really concerned about and looking for feedback, here is some information:

    1. Upstart loan - took out the loan August of last year
    2. 50k loan
    3. Lied on application and said I was still making 120k which was untrue I was unemployed at the time getting PUA.
    4. The application did not ask for any information on my employer, nor did it ask for any income verification or anything I was instantly approved for the loan just based on my contact information and stating I made 120k a year and was employed.
    5. I made 3 scheduled payments on the loan before stopping.

    That's the info on the situation and it's got me a bit concerned about what could happen. What would prompt Upstart to challenge the discharge in the first place do they even have access to my financial records like the bankruptcy trustee has or would they simply have to challenge based on me only making 3 payments and still owing the majority of the loan? Then at that point they could dig to see if I was honest on the application?

    I didn't spend any of the money on things other than bills, to pay off an IRS debt and to pay for my pet's surgery. No big purchases at all with the money.

    So anyway, how likely am I to get challenged on this? If I get challenged by Upstart then what happens to me when they find out I wasn't employed making 120k?

    I'm really concerned at this point, freaking out a bit to be honest I may have screwed myself by doing that.

    #2
    Originally posted by Aidencent55 View Post
    1. Upstart loan - took out the loan August of last year
    2. 50k loan
    3. Lied on application and said I was still making 120k which was untrue I was unemployed at the time getting PUA.
    4. The application did not ask for any information on my employer, nor did it ask for any income verification or anything I was instantly approved for the loan just based on my contact information and stating I made 120k a year and was employed.
    5. I made 3 scheduled payments on the loan before stopping.
    With the pandemic, many people stopped paying on debt. There's no way to tell what Upstart will do in this situation. Usually, for such large unsecured amounts, lenders like Upstart require verification of employment. I wonder why Upstart didn't perform any due diligence, especially in the middle of the pandemic. That still doesn't change that you only made 3 payments and it is a large unsecured loan.

    Originally posted by Aidencent55 View Post
    That's the info on the situation and it's got me a bit concerned about what could happen. What would prompt Upstart to challenge the discharge in the first place do they even have access to my financial records like the bankruptcy trustee has or would they simply have to challenge based on me only making 3 payments and still owing the majority of the loan? Then at that point they could dig to see if I was honest on the application?
    Yes, this type of creditor could seek to have their claim treated as non-dischargeable. Since it's a larger amount I don't see anything that would financially bar or scare them away from filing a complaint (adversary proceeding).

    Originally posted by Aidencent55 View Post
    I didn't spend any of the money on things other than bills, to pay off an IRS debt and to pay for my pet's surgery. No big purchases at all with the money.
    Using to pay the IRS alone could make it non-dischargeable, but the creditor would need to complain.

    Originally posted by Aidencent55 View Post
    So anyway, how likely am I to get challenged on this? If I get challenged by Upstart then what happens to me when they find out I wasn't employed making 120k?
    Absolutely no way to tell. But you should be prepared that Upstart could complain that you made no real attempts to pay the debt. What works on your side is the pandemic and the shear volume of defaulted loans across the country.


    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog

    Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.

    Comment


      #3
      From my understanding peer to peer loans like this, the lending company (Upstart in this case, Lending Club another big one) gets their cut right away off the top from the origination fee which they take out of the initial disbursement.

      Since they get their money right away, it's ultimately the individual funders who take the fall in a bakruptcy and these funders are warned themselves which loans carry more risk. This to me would make it less likely they would challenge than a regular bank that fully funded a personal loan of 50k since Upstart would have already got their money.

      Perhaps others have more experience with this sort of creditor or can share thoughts on this more.

      Comment


        #4
        During normal times, you might have faced an AP, however due to the virus pandemic and the large number of people who suddenly lost their jobs, I think you will "skate by". Instead of assuming fraud, the lender will assume that you took out the loan with intent to repay it, but due to sudden economic problems, you lost your job and ended up bankrupt.

        Comment

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