This question on Money.SE concerned a person who had taken out a number of loans. He didn't intend to repay these loans in full, planning instead to default and leave the country. Several posters on Money.SE claimed that such actions would constitute fraud or theft or some similar crime. Would they?

For the purposes of this question, let us assume:

  • The borrower received a single unsecured loan in the amount of $10,000.

  • The borrower did not misrepresent any facts (such as income, assets, etc) on his loan application.

  • At the time of applying for the loan, the borrower had already made up his mind that he would not fully repay the loan; and there is evidence to establish this. (Perhaps he wrote a diary entry to that effect, or bragged about it to someone.)

  • The borrower has sufficient assets and/or income that he could make the payments without undue burden, if he wanted to.

  • The jurisdiction is California, USA (though if other jurisdictions are different, that would also be interesting).

Followup: Suppose instead that at the time of applying for and receiving the loan, the borrower did sincerely intend to make his best efforts to repay it in full, but at some later time he changed his mind and decided that, although he had sufficient available funds to make the payments, he wasn't going to do so anymore; and did in fact stop paying. Would that constitute a crime of any kind?

Obviously the borrower could be sued in civil court and have his assets seized, etc, - but the question here is whether he could be subject to criminal sanctions.

  • 1
    Perhaps related: en.wikipedia.org/wiki/Good_faith#Law
    – Pacerier
    Commented Jul 10, 2015 at 10:24
  • 3
    The second assumption cannot be true in your scenario: "The borrower did not misrepresent any facts (such as income, assets, etc) on his loan application" ... I'm pretty sure somewhere (probably manywhere) on the contract the borrower agrees to repay the borrowed sum (in such installments etc ...). If you take out the loan without intention to repay, you did misrepresent the main and most important fact: your intention to repay.
    – Hoki
    Commented Aug 7, 2019 at 10:42

3 Answers 3


If, at the time of application for the loan, the borrower has no intention of repaying, it appears that it is a crime. From California Penal Code section 532:

(a) Every person who knowingly and designedly, by any false or fraudulent representation or pretense, defrauds any other person of money, labor, or property, whether real or personal, or who causes or procures others to report falsely of his or her wealth or mercantile character, and by thus imposing upon any person obtains credit, and thereby fraudulently gets possession of money or property, or obtains the labor or service of another, is punishable in the same manner and to the same extent as for larceny of the money or property so obtained.

The false representation in this case is that you falsely represent your intention to repay the loan.

Variations of your scenario invoke other sections of the law. If the false representation is instead about the ability to pay, then section 532a applies. If it's with regards to a secured loan, it's section 532f

Deciding not to repay the loan after the fact appears to be a purely civil matter: nothing in Chapter 8 (false personation and cheats) looks like it applies.


The crime of fraud or theft will probably have a specific definition in the California Criminal Code.

At common law, a person steals if

  1. without the consent of the owner, that person
  2. fraudulently and
  3. without a claim of right made in good faith
  4. takes and caries away
  5. anything capable of being stolen belonging to another
  6. with the intent at the time of taking to permanently deprive the owner of it.

The person you described:

  1. Does not have the owner's consent for his proposed actions (i.e. taking the money and not repaying it)
  2. Has obtained the money by deception; he has not revealed his intention to not repay (i.e. fraudulently)
  3. Does not have a right to the money, nor does he believe, in good faith, that he does;
  4. Has taken it away; in cash or by putting it into his own bank account
  5. Money; which is something capable of being stolen
  6. With the intention of permanently depriving the owner of it.

This is common law theft (and probably meets whatever statute definition is applied) and is a crime punishable by the state.

  • I'm unsure about 1, 2 and 3. The lender willingly gave the money to the borrower (though of course they were not aware of his intentions to fail to repay it). For 2, can you explain how this is "fraudulent"? The Wikipedia article on "fraud" suggests that it must involve "the intentional misrepresentation or concealment of an important fact" - which fact has been misrepresented or concealed here? And why do you say he does not have a "good faith right" to the money? Commented Jul 9, 2015 at 6:00
  • @NateEldredge answer edited to be more clear
    – Dale M
    Commented Jul 9, 2015 at 6:08
  • @Dale it's more likely that contract law will come into play here - if you enter into a loan agreement with a credit provider and you act contrary to your agreement, it's almost certainly the case that you'll be ordered to meet the terms of the contract. Whether it is a crime or not is a matter of statute.
    – jimsug
    Commented Jul 9, 2015 at 7:01
  • 1
    @jimsug undoubtedly, however, the OP question was if entering a loan agreement with the intention of stealing the money was Prima facie a crime. It may well be a crime the state is not interested in pursuing but it is most definitely a crime.
    – Dale M
    Commented Jul 9, 2015 at 8:54
  • 5
    @DJClayworth "This isn't morally OK" does not necessarily mean "there is a criminal statute prohibiting this."
    – cpast
    Commented Jul 9, 2015 at 13:10

Keep your eye on the ball kid, watch this!

It is impossible to get the signature loan, without agreeing by signature to the loan, whether repayment is then made or not, irregardless of previous//current intent to not repay.

If it's been endorsed//signed by the borrower, then they did in fact agree to to the terms, even though they may try to claim they didn't, or someone else might claim they didn't. Even if they go on to not make a single payment just as claimed beforehand, if they signed the contract, well then they agreed with the terms, even though they now do not repay the loan based upon their signature of agreement.

Absurd as it would be, even if the borrower tried to claim they didn't agree to the loan terms by claiming they had no intention of ever repaying the debt by providing video evidence of their non intent, there is evidence to prove in "fact" they did intend on repaying the loan by fact of "signature" for the loan.

  • 3
    This misses the point. If I borrow $10,000, then things go wrong, and I can't repay it, that's not a crime. Because I said truthfully that I wanted to repay. There were no facts known at the time of the loan that I hid from the lender. I owe the money, of course, but I didn't commit fraud. If I can't repay that's just bad luck for the lender. But if I never intended to repay, that's a fact, known to me at the time of the loan, that would have stopped the loan if the lender had known. That makes it fraud. Yes, I need to repay the loan anyway, but I also committed a crime.
    – gnasher729
    Commented Jul 12, 2018 at 21:22

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