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clients across Canada since 1987

Apr 27, 2017

What are the signs of bankruptcy abuse and fraud?

Many Ontario creditors have faced circumstances in which high-net-worth clients evade debt and systematically hide assets. Some even go as far as committing bankruptcy fraud. When company owners stand to lose hundreds of thousands of dollars, they may feel there is no way out and that their businesses might be in jeopardy.

There are signs which indicate fraudulent intentions - when a debtor files for bankruptcy. The individual may continue trading, and may even obtain loans after realizing that he or she would be unable to settle debts. In some cases, it might be obvious that the person contributed to, or caused, the circumstances that led to bankruptcy by living an extravagant lifestyle, gambling or other reckless forms of financial management. Another sign of fraud involves undue preferential payments being made to one creditor while other debts were neglected.

Other signs of bankruptcy abuse include the bankrupt giving away valuable assets when insolvent - whether or not the bankrupt indended to hide these assets from creditors. When a court determines that such misconduct took place, the consequences will depend on the details of the case. The court may refuse or suspend the discharge or the grant of conditional discharge of the person's debt.

Ontario creditors who suspect bankruptcy abuse or fraud committed by high-net-worth clients need not tackle the problem on their own. Professional help is available from experienced lawyers who are particularly skilled in debt recovery and bankruptcy matters. Seasoned lawyers can assist with uncovering fraudulent activities and obtaining Court Orders for repayment.