Lied on all loan applications

[cumulus32]

I am going for my consultation for Chapter 7. The things that worries me is that I took out 3 personal loans over a period of a month. I wrote my "future" salary that I was promised from my employer instead of my current. To sum it up, they only promised me that higher salary to keep me there. I am worried that they will contest it and it would be fraud for lying on my applications. I also modified my pay stubs to show the "future" salary when I submitted them. I am horrified they will ask me that!

[momofthree]

How old are these accounts and who are they with?

[cumulus32]

All of accounts are not credit cards, but unsecured personal loans through 2 federal credit unions and 1 smaller bank.

The loans were all opened within a month of each other and were all opened october 2008... nearly a year and a half ago. I made at least 6 months worth the payments to each of them before stopping 10 months ago.

[HHM]

You will probably be okay, the debts are old enough that I doubt the creditors would bother to object.

Simply stating your future income would probably not be enough for them to win (you had a reasonable basis for stating that as your income), but you modifying your pay stubs, that is bad. If those got entered into evidence, you would lose.

But let's ask the most obvious questions, why did you take out these loans and how much were they for?

[cumulus32]

You will probably be okay, the debts are old enough that I doubt the creditors would bother to object.

Simply stating your future income would probably not be enough for them to win (you had a reasonable basis for stating that as your income), but you modifying your pay stubs, that is bad. If those got entered into evidence, you would lose.

But let's ask the most obvious questions, why did you take out these loans and how much were they for?

I know that is why I am kicking myself. I took those loans out because my thinking at the time was that if I could cover the gap I was down each month (about a 1000 short) and would tide me over until I get that raise. I liked to have a little cushion you could say and did not like to cut it short. I always tried to have at least 6 months worth in my checking account in case something happened. Well it did shortly after me applying for those loans. I lost my job a month later, and continued to pay my loans for the next 5 months and exhausted all the money I had left. Then I moved back in with my parents and am working a part time job, for alot less than I was making then. I took out 3 unsecured loans each worth around 18 to 20k each, so about 55k total.

[momofthree]

I know that is why I am kicking myself. I took those loans out because my thinking at the time was that if I could cover the gap I was down each month (about a 1000 short) and would tide me over until I get that raise. I liked to have a little cushion you could say and did not like to cut it short. I always tried to have at least 6 months worth in my checking account in case something happened. Well it did shortly after me applying for those loans. I lost my job a month later, and continued to pay my loans for the next 5 months and exhausted all the money I had left. Then I moved back in with my parents and am working a part time job, for alot less than I was making then. I took out 3 unsecured loans each worth around 18 to 20k each, so about 55k total.

For that amount, they may very well come after you, and they will most likely win. Creating and submitting fraudulent income statements is what will bring you down, not that they were taken out so closely together.

I don't know much about fraud, but is this something that could possibly constitute criminal charges being filed? Isn't fraud a felony??? (I'm just asking, I honestly don't know and I'm curious)

[HHM]

Let's not freak him out, this will NOT result in any criminal issue.

Understand, creditors rarely object for the sole reason of a misstatement on an application. Most creditors don't even have a system to check for that when a bankruptcy gets filed. The accounts usually need to be tagged for further investigation for some other reason (i.e. never made a payment, taken out within 6 months of BK, or a very large amount within 12 months). Once the account is tagged, then someone may review the app if the loan was applied for within 24 months of BK.

You still have a risk, I am not saying don't worry, but by the same token, objections based solely on fraudulent apps are very hard to win. The creditors must demonstrate not only that you lied, but that the misrepresentation would harm them in some way. For example, if you were making $50K per year, and you put on your application that you were making $60K per year, would the creditor really have denied you the loan; was the creditor harmed in anyway; after all, you did make 6 months worth of payments.

[Dst1]

I also modified my pay stubs to show the "future" salary when I submitted them.

I'm going to give you some frank advice. HHM is right, it's highly improbable that you are going to get challenged on this both because of the age of your loans and because you paid on them for six months.

Lying on your application is not enough to sink you but forging pay stubs is illegal. Regardless of whether you ever file BK or not, submitting false documentation for a loan is illegal in its own right. Look up the name of the former governor of AZ, Fife Symington. That is exactly what did him in.

So my advice is simple: shut up. Go whistling past the graveyard.

And thank god there is a place like BK Forums where you can get good advice quietly.

[cumulus32]

I'm going to give you some frank advice. HHM is right, it's highly improbable that you are going to get challenged on this both because of the age of your loans and because you paid on them for six months.

Lying on your application is not enough to sink you but forging pay stubs is illegal. Regardless of whether you ever file BK or not, submitting false documentation for a loan is illegal in its own right. Look up the name of the former governor of AZ, Fife Symington. That is exactly what did him in.

So my advice is simple: shut up. Go whistling past the graveyard.

And thank god there is a place like BK Forums where you can get good advice quietly.

I was thinking the same. So I should not mention this to my lawyer at all then or should I tell him everything?

[blessed]

I would bet a majority of people lie on credit applications. I know I have.

Let us know what happens.

[music12]

i don't know whether they'll go after you, but seriously, you were totally insane to modify your paystubs. no honest person does something like that. i'm guessing it's not the only dishonest thing you have done, so you'd better be very careful.

[fltoo]

[QUOTE=music12;394098]i don't know whether they'll go after you, but seriously, you were totally insane to modify your paystubs. no honest person does something like that. i'm guessing it's not the only dishonest thing you have done, so you'd better be very careful.[/QUOT



Your statement is really inappropriate. You do not know this person to make that judgement.
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As it says in the fine print of a credit app, a lender "MAY" refer fraud to the authorities and yes, it is criminal.

But, chances are very slim for this to happen. You paid for 6 months and the lender is not going to look up your application and paystubs searching for false info.

I really think you are fine if you keep this to yourself. A lawyer might be bound to disclose fraud if he knows about it. Ask one of the lawyers here, I am not sure. So, I would not say a word to anyone.

[helpmeout]

I was thinking the same. So I should not mention this to my lawyer at all then or should I tell him everything?

It's not going to be that hard for the banks to prove what you did. And if they submit the forged paystubs, your attorney won't be happy about being blindsided by his/her own client.

I would come clean with your attorney.

[music12]

i think your best bet is to say nothing and hope nobody looks into your case (which would become more and more likely the more you wait). if they start asking questions, then tell your lawyer everything so he can choose the path of least resistance.

[blockhead]

I was thinking the same. So I should not mention this to my lawyer at all then or should I tell him everything?

Like he said, Go whistling past the graveyard.