Bankruptcy, The Fraud Element, & Recovery From The Consumer Recovery Account
The California Consumer Recovery Account allows those who have been defrauded or had trust funds converted by a real estate licensee in a transaction requiring a license to recover up to $50,000 of their actual losses when the real estate licensee has insufficient assets to satisfy a final civil judgment. While further limitations to recovery from the account exist, one of the more stringent criteria bears repeating: the victim must have a final civil judgment or arbitration award for fraud, not just a cause of action sounding of negligence.
The Bankruptcy Out For The Real Estate Licensee Is Limited
When a real estate licensee has an outstanding judgment they can always turn to bankruptcy. If the licensee qualifies for chapter 7 bankruptcy they can discharge the judgment and remove their personal liability for the debt. However, fraudulently incurred debts are nondischargeable under Section 523(a)(2) of the US bankruptcy code. Therefore, if the victim has a final civil judgment for fraud the real estate licensee may not be able to discharge that debt in bankruptcy. For the licensee to be denied a discharge due to fraud the victim-creditor will have to bring an action against the licensee in bankruptcy court for the debt can be declared nondischargeable. If that should happen the victim-creditor will be able to maintain their right to recovery from the consumer recovery account as the debt will not have been eliminated in bankruptcy.
To learn more about the fraud complication to bankruptcy and the consumer recovery account read http://buysantarosarealestate.com/bankruptcy-consumer-recovery-account/; to consult with a bankruptcy attorney regarding fraudulent debt consult http://santarosabankruptcy.us/ attorney Adam Garcia serving Northern California residents. For a debt to be declared nondischargeable a very specific inquiry is conducted pursuant to Ninth Circuit case law. If you have questions as to whether your debt is dischargeable contact a bankruptcy lawyer for a free consultation.