Dischargeability of a Bad Check in Bankruptcy

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The U.S. federal government allows all Americans to file for bankruptcy protection when they have found themselves burdened by unsecured debts they are unable to pay back. In some cases, a Chapter 7 proceeding allows them to wipe out all of their financial obligations in order to obtain a fresh start. For those who have a current job and are receiving regular income, they may wish to file for Chapter 13, which gives them time to repay their creditors while restructuring their debts.

Bankruptcy Fraud & Bad Checks

Individuals who can qualify for a Chapter 7 bankruptcy are allowed to discharge nearly all of their unsecured debts. However, the federal government prohibits debtors from writing off any debts incurred during the commission of a crime or fraudulent act. Dealing with a bad check bankruptcy may depend upon the amount of the check that as written. The majority of bankruptcy courts have held that issuing a bad check without further evidence of misrepresentation does not necessarily constitute grounds in denying the discharge of the debt. The burden of proof remains on the creditor to prove fraudulent representation by the debtor.

The Automatic Stay

The laws in each state govern how the passing of a bad check will be prosecuted. The law may impose criminal penalties, which include making restitution to the victim, a costly fine and the individual may end up with a criminal record. When you file for bankruptcy protection, the federal court issues an automatic stay preventing your creditors from taking any further legal action against you. However, this will not stop any criminal prosecution being filed against you by the local District Attorney’s office.

Legal Guidance From a Bankruptcy Expert

Discharging a bad check in bankruptcy may be possible if the amount was small, or it was a one-time offense and if there is evidence to support the theory that the creditor agreed to hold a post-date check until sufficient funds could be deposited. The laws governing bankruptcy can be extremely complicated and if you wish to write-off bad debts, you will need the legal expertise of a bankruptcy attorney to examine the facts of your case.