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I hear the headlined refrain daily.

No, not from my clients (thankfully) – from my preschooler and toddler.

And I rarely believe them.  They usually are conspiring with each other.

I give my clients, on the other hand, the benefit of the doubt.

“I had no idea!”  “He never told me!” “I was not involved in any part of this.”

These can be common reactions from clients, or anyone, to the surprise of bad or unexpected news.

This is especially true upon learning of previously unknown debts or, even worse, wrongful activity, undertaken by those you trust the most – your spouse, your trusted friend, or your business partner.

If you didn’t have anything to do with causing the problem, you can’t be responsible for it, right?

Wrong, according to the U.S. Supreme Court.

Earlier this year, the U.S. Supreme Court ruled that individuals cannot use bankruptcy to wipe out debts fraudulently incurred by a partner, even if the other partner was not involved in the fraud.

The Court reached its decision by focusing on how the debt was fraudulently incurred, not who incurred it.

“That’s not fair!”  (Again, a common refrain in my house.)

True, it may not be fair to the innocent partner.

His or her only recourse, if any, may be to try to recover his or her losses from the fraudster, though the chance of recovery may be slim to none.

Nonetheless, it is likely the fairest outcome for the innocent victim of fraud.

We all want to trust our personal and business partners.

It’s less work, after all, to sit back and let someone else handle the deal or project.

Less work now, however, can mean more liability later.

To protect yourself, be aware of your spouse’s or business partner’s conduct.

Ask questions. Stay on top of financial issues. Don’t ignore red flags.

Don’t sign a document without knowing all material facts about its origin and its ramifications.

And if you need help, contact your FOS attorney.