Scary Consequences of Lying on Your Credit Card Application

Reader Brooke, a divorce Attorney in New York, shares this word of caution to those of you who have ever thought about exaggerating the truth with regards to income on a credit card application. She has also generously agreed to answer any questions presented in the comments section of this post.

I practiced as a divorce attorney in New York for many years.  The majority of my clients or their ex-spouses were not straight W2 employees, but rather business owners, employees of family businesses, or worked for organizations where much of the income was off the books and could be manipulated by fancy accounting and inflated expenses/deductions.  Thus, their true income was actually much higher than that reflected on their tax returns and presented to the Court, their ex-spouse, and opposing counsel during the divorce action.  Not only were they trying to defraud the government and pay less taxes, but they were looking to pay significantly less in spousal and child support.

There are many methods utilized by attorneys to circumvent this problem in an effort to prove true income.  I will not bore all of you non-legal travel lovers out there with all of the details, but what I will say is that during this process, I would often Subpoena the person’s credit card applications to see what they alleged to have earned when applying for credit cards throughout the marriage.  More often than not, they inflated this number to gain approval for a card, and we (and the Courts) held them to this figure that they listed and signed off on during the application. This data supplied concrete evidence for the Court that the spouse earned more than they reported and assisted us in receiving higher settlements. This could be exploited by a greedy ex-spouse in an effort to prove to the Court that you are admitting to earning an amount that is actually higher than that you earn.  Believe me, an ex-spouse is nearly always claiming their spouse earns more than they do. Thus, the moral of the story is this: beware of what you put on those credit card applications, it can and will be held against you during legal proceedings!

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  1. I love this line “Not only were they trying to defraud the government and pay less taxes”. When ever I see someone trying to pay less than their fair share… I think of them not defrauding the government… But defrauding the rest of us that do help pay for the roads, military, national parks and other vital needs of this great country.

  2. It seems a laughable embarrassment for our court system that what John Doe writes on his own CC application gets accepted by the courts as “concrete evidence” of income.

    LOL lawyers and judges.

  3. Opposing counsel must be idiots. The person listed a higher income on their application because they had a reasonable expectation of earning that amount in the coming year (legit) but future information proved that expectation false.

    • @Gary – That is what the person will claim, but it does not mean they will be believed when taking into account the totality of the facts/information.

      • @Brooke Right, but the totality of information will be what triangulates around the individual’s actual income, not their inflated income claim as noted on the credit card application. In other words, the weight of an incorrect statement as to income won’t be all that significant after all. 😉

        • @Gary – In that circumstance (the person inflated their income)yes, eventually after what could be unnecessary correspondence, discussions with the court and motion practice (think unnecessary legal fees). And again, that doesn’t take into account the person that puts their true income on the application, but claims significantly less income for tax and court documents. Probably a more likely risk!

  4. When you will need a lawyer , you will love yours if he/she wins , are bankers , doctors real estate agents, car salesman any better —

    ED, GREG WHAT IS YOUR “altruistic ” profession

  5. I believe the article states that this information could be used. I wouldn’t believe a judge would hold the settlement according to the CC apps, but it would suggest to the judge that the spouse could be making more and then possibly investigate further to find out his/her real income.

    However, I would guess there are some judges would take this information as fact and submit these figures into court. That would suck. Lawyers only find these things out, its not the lawyers fault that the person lied on their CC apps. Lawyers get the short end of the stick sometimes for finding the truth (key word sometimes).

  6. Ed Z, Greg, lawyers suck because they use fraudulent information supplied by the applicant against them, or because the attorney is able to find out a person’s true income when they are trying to defraud their spouse?

  7. I am an attorney in VA with some domestic relations experience. A court would never accept a CC app as proof on its own. I have found evidence like CC apps most probative when it is clear the person in question is lying through their teeth. Once your credibility is shot, the judge is going to be much more willing to look beyond your testimony when deciding the matter.

    For Ed, I dont currently practice law since my interests have changed and there are some ethical issues with how many lawyers practice. However, a professor of mine once told me, “if you really dislike lawyers you can always move to a place that doesnt have any of them, I hear sub-saharah Africa is a great place to live.”

  8. anyone with a quarter of a brain would show the court that a tax return trumps a credit app for which no proof (the same tax return) was show at time of app. but feel free to not lie. more miles for me

  9. I not a lawyer but I have to defend them here. I think what actually sucks are liars and cheats. It’s basic stuff. Tell the truth and play by the rules. It’s liars and cheats that force us to employ lawyers.

  10. And this is why you ALWAYS get a prenuptial agreement prior to marriage. Spell out the exact liabilities owed to one another if a divorce or separation should occur and leave it at that.

    One party can massively over consume in a marriage beyond their contribution, then come after half of the rest in court.

    One party can assume all of the uncompensated household maintenance and then be left with no career, updated skills or marketability to earn an income.

    I once saw a friend of mine negotiated a prenuptial agreement with his fiance, that should a divorce occur, he owed her enough tuition for an associate’s degree at the local community college if she waived her rights to any future claims against his assets.

    Fortunately, they are still happily married after 15 years and she holds a Masters degree now.

    Not every marriage has to be the horror story supplied by your local divorce attorney.

  11. I’m not sure I’m buying it. Since divorce records are public in most states including NY (no danger of confidentiality or disclosure) I would be interested to seeing you reference one case where the court decided cc app was used to determine support and “held” them to that figure. More importantly I would like to see one case where husband and wife wouldn’t both be lying to obtain miles??? In which case its simple just lie more on her app!!! Extra miles and big settlement.

  12. Dan- There are plenty of lawyers in sub-saharan Africa. And it can be in fact a great place to live. Please take your bigotry somewhere else.

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