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The importance of being honest on credit applications


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12 replies to this topic

#1 Shawnee

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Posted 06 April 2006 - 09:54 PM

A few days ago there was a story posted about a lady who lied about her employment and income on credit applications then subsequently defaulted on over $100,000 in debt. I have got the feeling every time one of these stories is posted some don't think much of it, and at times minor flamewars have erupted between those who think the debtor did something wrong, and those who think the debtor did nothing wrong. Hopefully this thread won't degenerate like that, but I want to point out why you should never make false statements on a credit application.

First, let's take a look at 18 USC § 1014:

§ 1014. Loan and credit applications generally; renewals and discounts; crop insurance

Whoever knowingly makes any false statement or report, or willfully overvalues any land, property or security, for the purpose of influencing in any way the action of the Farm Credit Administration, Federal Crop Insurance Corporation or a company the Corporation reinsures, the Secretary of Agriculture acting through the Farmers Home Administration or successor agency, the Rural Development Administration or successor agency, any Farm Credit Bank, production credit association, agricultural credit association, bank for cooperatives, or any division, officer, or employee thereof, or of any regional agricultural credit corporation established pursuant to law, or a Federal land bank, a Federal land bank association, a Federal Reserve bank, a small business investment company, as defined in section 103 of the Small Business Investment Act of 1958 (15 U.S.C. 662), or the Small Business Administration in connection with any provision of that Act, a Federal credit union, an insured State-chartered credit union, any institution the accounts of which are insured by the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, any Federal home loan bank, the Federal Housing Finance Board, the Federal Deposit Insurance Corporation, the Resolution Trust Corporation, the Farm Credit System Insurance Corporation, or the National Credit Union Administration Board, a branch or agency of a foreign bank (as such terms are defined in paragraphs (1) and (3) of section 1(b) of the International Banking Act of 1978), or an organization operating under section 25 or section 25(a) [1] of the Federal Reserve Act, upon any application, advance, discount, purchase, purchase agreement, repurchase agreement, commitment, or loan, or any change or extension of any of the same, by renewal, deferment of action or otherwise, or the acceptance, release, or substitution of security therefor, shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both. The term “State-chartered credit union” includes a credit union chartered under the laws of a State of the United States, the District of Columbia, or any commonwealth, territory, or possession of the United States.

http://www4.law.corn...14----000-.html

That is one tough paragraph to read. Fortunately, we have some help from Eighth Circuit Court of Appeals:

For his § 1014 conviction, the government had to show that Jenkins made a false statement to a bank with the intent to influence the bank’s actions. See § 1014.


http://www.ca8.uscou.../04/993452P.pdf

The Fourth Circuit also simplifies it:

A violation of § 1014 occurs when a person "knowingly makes any false statement . . . for the purpose of influencing in any way the action of . . . any institution the accounts of which are insured by the Federal Deposit Insurance Corporation . . . upon any application, advance, discount, purchase, . . . commitment, or loan." 18 U.S.C. § 1014.


http://caselaw.lp.fi...case&no=024755P

Regardless of the chances of prosecution, making false statements to obtain credit is a criminal act. Lying about employment, income, and houshould income definitely fall under § 1014. Why worry about it if you won't be prosecuted? Here's why:

11 USC § 523. Exceptions to discharge

(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by— 
(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition; 
(B) use of a statement in writing— 
(i) that is materially false; 
(ii) respecting the debtor’s or an insider’s financial condition; 
(iii) on which the creditor to whom the debtor is liable for such money, property, services, or credit reasonably relied; and 
(iv) that the debtor caused to be made or published with intent to deceive;

http://www4.law.corn...23----000-.html

Here is an example of a creditor enforcing § 523:

http://www.washlaw.e...421997.1209.htm

By the way, courts have repeatedly considered statements made on electronic (computer) forms to be written statements.

While I don't think any of us ever plan on filing a BK, you just never know what might happen down the road. This board is full of life stories where something happened out of the member's control.

Please, be entirely truthful on all your applications. You don't want to be stuck holding the bag in the event you have to use a BK for relief.



#2 TampaDude

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Posted 06 April 2006 - 10:33 PM

Don't lie on credit apps...it will probably come back to bite you in the ass one day...

#3 smush24

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Posted 07 April 2006 - 09:20 AM

Great topic and I hope people read it a million times.

Nothing good will EVER come from lying on a credit app.

#4 omer443

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Posted 23 April 2006 - 01:45 PM

Great topic and I hope people read it a million times.

Nothing good will EVER come from lying on a credit app.

Sadly enough, I know a perfectlt wonderful person who spent a year in federal prison for this very thing. He wrote a phony letter to a bank AFTER they had already loaned him the money to stop them from defaulting.

#5 BrwnEyedGirl

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Posted 12 May 2006 - 11:34 PM

Thanks for posting that Shawnee.

#6 GEORGE

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Posted 19 May 2006 - 07:37 PM

CLEAR OUT ALL THE DRUG DEALERS, DRUNK DRIVERS AND MURDERERS FROM THE PRISONS!!!

CREDIT CARD INCOME LIARS WILL BE TAKING THEIR PLACE!!!

NO FLAMES NEEDED!!!

THIS IS NOT EVEN 1% POLITICAL

Edited by GEORGE, 19 May 2006 - 07:37 PM.


#7 Shawnee

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Posted 20 May 2006 - 10:55 AM

CLEAR OUT ALL THE DRUG DEALERS, DRUNK DRIVERS AND MURDERERS FROM THE PRISONS!!!

CREDIT CARD INCOME LIARS WILL BE TAKING THEIR PLACE!!!

NO FLAMES NEEDED!!!

THIS IS NOT EVEN 1% POLITICAL


That is not the point. The fact is it is a criminal act and makes any debt obtained by false statements nondischargable in BK proceedings.

#8 cali99boy

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Posted 20 May 2006 - 12:17 PM


CLEAR OUT ALL THE DRUG DEALERS, DRUNK DRIVERS AND MURDERERS FROM THE PRISONS!!!

CREDIT CARD INCOME LIARS WILL BE TAKING THEIR PLACE!!!

NO FLAMES NEEDED!!!

THIS IS NOT EVEN 1% POLITICAL


That is not the point. The fact is it is a criminal act and makes any debt obtained by false statements nondischargable in BK proceedings.

I think its great that the person still has to pay their debt.
I also dont agree with any discharges of debt regardless of falsified or true statements.

#9 GEORGE

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Posted 20 May 2006 - 05:07 PM


CLEAR OUT ALL THE DRUG DEALERS, DRUNK DRIVERS AND MURDERERS FROM THE PRISONS!!!

CREDIT CARD INCOME LIARS WILL BE TAKING THEIR PLACE!!!

NO FLAMES NEEDED!!!

THIS IS NOT EVEN 1% POLITICAL


That is not the point. The fact is it is a criminal act and makes any debt obtained by false statements nondischargable in BK proceedings.

JUST MY STATEMENT...

I'm not making you agree


#10 GEORGE

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Posted 20 May 2006 - 05:09 PM

You can go to JAIL when you lie EVEN IF YOU HAVE PIF???

#11 Shawnee

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Posted 20 May 2006 - 06:44 PM

You can go to JAIL when you lie EVEN IF YOU HAVE PIF???


Read it again GEORGE, carefully. Regardless if you are prosecuted, the fact is that making false statements on a credit application is a federal crime punishable by up to thirty years in prison and a one million dollar fine.

Edited by Shawnee, 20 May 2006 - 06:45 PM.


#12 GEORGE

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Posted 20 May 2006 - 06:46 PM


You can go to JAIL when you lie EVEN IF YOU HAVE PIF???


Read it again GEORGE, carefully. Regardless if you are prosecuted, the fact is that making false statements on a credit application is a federal crime punishable by up to thirty years in prison and a one million dollar fine.

THEY TAKE CREDIT CARDS???

#13 Flash128

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Posted 23 May 2006 - 02:58 PM

Good point Shawnee.




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