What Is Bankruptcy Fraud?
June 24, 2020
Bankruptcy is a process that offers individuals who are unable to repay their debts the opportunity for financial relief. But what happens when someone makes false claims when it comes to their finances, deliberately hide assets, or intentionally leaves out relevant information when filing for bankruptcy? This is known as bankruptcy fraud and comes with serious consequences for the case.
To learn more about bankruptcy fraud, continue reading below.
TYPES OF BANKRUPTCY FRAUD
Bankruptcy fraud can take many different forms. However, today we will discuss a few common types of bankruptcy fraud.
Concealing Assets — At almost 70% of fraudulent cases, concealment of assets is the most common form of bankruptcy fraud. This form of fraud occurs when an individual deliberately fails to list every asset on the bankruptcy forms. People do this because they know a bankruptcy trustee cannot liquidate assets that are unknown to them. Additionally, this type of fraud occurs when individuals transfer money, assets, or property to their friends' or family members' names, so the asset cannot be surrendered for administration by the bankruptcy trustee.
2. Multiple Filings — This type of fraud occurs when an individual files for bankruptcy in more than one state, using their real name and information, using an alias name and information, or combining the two. In most cases, these individuals will list the same assets on each of their claims but choose to purposely leave out some of their assets on the claims to protect themselves from total liquidation.
3. Intentionally Filing False Information — When an individual deliberately files incomplete forms or false information, they can be found guilty of bankruptcy fraud. Additionally, the person can be found guilty of perjury.
4. Petition Mills — This form of bankruptcy scheme is becoming common in the U.S. This occurs when an individual poses as a consultant or advisor claiming to help tenants or real property owners who are experiencing financial difficulties to avoid eviction or foreclosure. The consultant or advisor uses the tenant's name and information to file bankruptcy, charge service fees, and frustrate creditors to drag the case out over time. While the tenant or homeowner believes they are getting assistance, they are spending money to only be evicted or suffer foreclosure of their property at the conclusion of the case.
LEGAL CONSEQUENCES OF BANKRUPTCY FRAUD
Bankruptcy is known as a white-collar crime and is a federal offense that can result in significant consequences. These consequences can include the denial of discharge, fines, and imprisonment. If a person is proven guilty for bankruptcy fraud, they can serve up to five years in prison and/or up-to $250,000 in fines.
CONTACT CHARLES W. DAFF, BANKRUPTCY ATTORNEY
Avoid making mistakes in your bankruptcy case with the help and guidance of a knowledgeable bankruptcy attorney. Charles W. Daff has more than 43 years of experience in bankruptcy law and wants to represent you or your business during this difficult time. If you reside in Orange County, Riverside County, San Bernardino County or Los Angeles County and need help with a bankruptcy case contact Charles W. Daff Bankruptcy Attorney, today to schedule your free consultation.