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    #1

    Who pays?

    If a creditor files an AP based on fraud and fraud is not found do they have to pay the legal costs of the debtor to defend themselves?

    This is for a business equipment lease and the creditor is saying we lied about our assets and income. We have hired an attorney and we didn't lie but this is costing us money that we don't have. Our attorney thinks they are fishing for a settlement but no figures have been given yet. I'm definitely willing to fight this because I know we didn't commit fraud but I have finite resources.
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    #2
    Originally posted by neverending View Post
    If a creditor files an AP based on fraud and fraud is not found do they have to pay the legal costs of the debtor to defend themselves?

    This is for a business equipment lease and the creditor is saying we lied about our assets and income. We have hired an attorney and we didn't lie but this is costing us money that we don't have. Our attorney thinks they are fishing for a settlement but no figures have been given yet. I'm definitely willing to fight this because I know we didn't commit fraud but I have finite resources.
    I believe that if they file an AP based on such a claim and fail to show/prove that there was fraud, they will lose the AP and your attorney can file to recoup the legal fees to fight the AP.

    We thought that a creditor was going to file something to make my dh's business debt (personal guarantee) non-dischargeable, but they never did. They make our lives he** for a while, but they never filed anything in the end and it was discharged. There was never any fraud or anything like that, just a very vengeful bank after us.

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      #3
      If this was an AP dealing with consumer debt and the Complaint was based on 523(a)(2) then under 523(d) one could recover attorney fees. Unfortunately you have indicated that this is a business debt. Unless the creditor's conduct was so egregious, to recover fees you would have to find some contractual or statutory basis for the entitlement to fees.

      See: Travelers Casualty & Surety Co. Of America v. Pacific Gas & Electric Co., 127 S.Ct. 1199 (2007).

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