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  1. #1
    Join Date
    Sep 2016
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    13,916

    Default Recovery of Money Obtained by Fraud in Bankruptcy Proceedings

    If somebody obtains large sums of money by fraud, what happens if they file for bankruptcy? The trustee is trying to recover the money, and has objected to the debtor's claims of exemptions, but the debtor and his lawyer keep filing documents and delaying proceedings. The debtor is being prosecuted and may end up in jail.

    What happens if the statute of limitations runs on a fraud claim while the trustee is trying to recover the money? How can the people cheated by this person get their money back?

  2. #2
    Join Date
    Sep 2005
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    98,846

    Default Re: Recovery of Money Obtained by Fraud in Bankruptcy Proceedings

    If we're talking about large amounts of money, the victims of the fraud may individually or collectively consult a lawyer about how they may protect their rights. If this was a criminal fraud, whatever delay may occur, odds are that the bankruptcy court is going to find that the debt is non-dischargeable. The victims may pursue their claim through the bankruptcy court, in adversary proceedings, they may seek relief from the stay to file a lawsuit in civil court, or they may discuss with their lawyer the possibility of filing a civil case after the bankruptcy proceedings end -- but they need to keep in mind that if he's incarcerated, and they have removed their claims from the bankruptcy case, there may be no realistic means to recover their money. The statute of limitations will normally be tolled by the defendant's filing for bankruptcy protections, at least until the stay is lifted; statute of limitations issues are best discussed with and analyzed by a lawyer who has access to the full facts.

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