criminal-law
Is it illegal to refuse to provide proof of income after receiving a loan/credit?
<p>Say someone applies for a loan and they get the loan. Afterwards the lender wants to see proof of income, but the lendee denies and refuses to provide any proof after the fact. Given that it's after and not before, is there any difference in legal routes? If one refuses to provide proof of income before receiving any money, it's obvious that the lender can just not give it and not care -- but what about after the loan was given? Can they legally demand you provide proof after they give money?</p>

<p>Are you required by law to do so then? If you refuse, would they cancel your account and make this a civil/term based account termination -- or is this actually an entire criminal suit to unfold?</p>

<p>Because it's very easy to say no and avoid giving proof, but saying no isn't proof of being guilty yet.</p>

<p>Realistically, how far could this turn serious if the lender demanded and the lendee refused?</p>

<p>First, refusing to provide proof of income to a lender cannot possibly be a crime per se. Lying about your income to get the loan might be fraud, but whether you agree to provide proof to the lender later cannot be a crime.</p>

<p>Second, the loan agreement may contain language which obligates you to provide proof of income as requested. If the lender did not verify income up-front, this is not unlikely. If so, refusal to  provide such proof would entitle the lender to any available remedies. It's possible that a loan agreement could entitle the lender to pursue specific performance which, if granted, might compel you to provide proof (or some alternative if this is impossible) or be held in contempt of court for refusing to comply with a court order. More likely, the lender would be able to require accelerated repayment of what they're owed.</p>

<p>If, based on your refusal to provide proof of income, the lender suspects you committed fraud when you applied for the loan, they can file a police report and press charges. If the prosecutor thinks they have a case and chooses to pursue that charge, proof of income (at least, when you applied for the loan) might have to come out as part of your defense.</p>

<p>This is all very speculative. Most likely you can just ignore the lender's request and avoid missing any payments. I wouldn't expect any favors from this lender going forward.</p>

<p>It's is unclear what this question is really asking. </p>

<p>If the lender has made a one time loan of money not conditioned upon proof of income, and the borrower is not in default, the lender has no legitimate reason to know. And, if you default and the lender successfully sues you for the unpaid balance, as a judgment creditor, it can demand to know all of your sources of income for collection purposes.</p>

<p>But, I suspect that this question is really a case of sloppy use of language. If the lender has merely extended a line of credit, but has not actually lent the money yet, the lender can generally decline to allow further advances against the line of credit (e.g. a credit card with a credit limit) without receiving proof of income, unless the line of credit agreement is very unusual.</p>

<p>Another possibility is that the lender made the loan based upon a representation from the borrower that the borrower had a certain income which wasn't confirmed with any third party documentation. In this case, the lender is not asking for proof of income in connection with an underwriting decision, it is asking for proof of income in connection with a fraud investigation and the language of this question suggests (without saying so outright) that the borrower did indeed defraud the lender by stating that the borrower had more income than the borrower actually did.</p>

<p>In this is what happened, the sense of the question is different. Often, the loan document would require the borrower to provide proof to support any representations made by the borrower when the loan was underwritten, and failure to do so would usually constitute an event of default causing the entire loan balance to become due immediately.</p>

<p>If the borrower did indeed make a false representation regarding the borrower's income, which could be discovered in court proceedings if the lender joined a fraud claim to a breach of contract claim in a debt collection action, then the borrower could be responsible for punitive damages in addition to the amount lent, the borrower would be subject to criminal prosecution for fraud, and the debt would not be dischargeable in bankruptcy.</p>

<p>Failure to provide proof of income where the borrower represented that the borrower had income, could very well provide probable cause for a criminal prosecution for fraud, even though business records showing that fraud was committed from third party income sources might be necessary to prove fraud beyond a reasonable doubt at trial.</p>
