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Man denied bankruptcy because of embezzlement

If you have suffered from some very poor fortune or made some errors in judgment, you may be able to make a clean start through bankruptcy. However, not all debt can be discharged, as one Georgia man learned recently. A bankruptcy court overseeing Northern Georgia ruled on March 6 that a man who had applied for bankruptcy could not discharge debt that he had accrued after attempting to hide money that had been erroneously transferred to his company. Because the court believed he had taken steps to hide the funds from its rightful owner, it considered the debt to be embezzlement, disqualifying him for discharge through bankruptcy.

According to court documents, the fact that money was accidentally transferred to his company meant that he gained the funds legally. It became embezzlement, however, when he was asked to return the funds and indicated that he would, only to spend nearly $75,000 on a number of purchases, including a tow truck and a car.

In after making purchases with about three-quarters of the funds, the man then returned roughly $25,000 to its rightful owners and filed for bankruptcy, which the court denied. It determined that filing for bankruptcy was inappropriate because the man's debt had occurred through an illegal act.

If you are considering using some form of bankruptcy to discharge debt, it is wise to consult with an experienced attorney beforehand. There are numerous factors that may contribute a court denying your petition for bankruptcy, and it is best to identify these problems before they arise. With proper help, you can make the most of a bankruptcy procedure and ensure that your rights are protected throughout the process.

Source: Bloomberg Business News, "Embezzled Money Can’t Be Discharged in Bankruptcy," Diane Davis, March 09, 2017

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