111 Waterloo Street, Suite 310
London, ON N6B 2M4


July 23, 2018

The word fraud scares many debtors, especially if they told white lies on credit applications, etc. But is that white lie, error or omission enough?  Generally speaking the answer is no, fraud must be meticulously argued and proven in court it is not enough that a situation has “the badges of fraud” (or prima facie evidence) intent must also be proven.  Did the fraudster intend to dupe the other person or was the matter an artifact of error, omission or simply a bad business practice?  Can that mistake lead to a criminal charge of fraud, and what are the consequences in a bankruptcy or proposal?

If the allegation itself were sufficient to make an act of error or omission an actual fraud, then our insolvency system would be in big trouble. Surely, we are all guilty of making mistakes, forgetting something, misspelling, placing a digit in the wrong place, bragging or exaggerating at various points in our lives. When filling out a credit application we may be in a bank or a shopping mall we may not have good information at our finger tips. Sometimes bankers or other salespeople complete the applications themselves and they may be guilty of making the error.

The point is, fraud must be proven in court for it to truly be a fraud. An allegation, unto itself, is not sufficient even with circumstantial evidence. When fraud is proven the debt arising from it will survive a bankruptcy or proposal proceeding and the debtor will need to deal with in a different way. If allegations were sufficient then surely credit card companies would be making the allegations all the time.