Filing for bankruptcy requires you to list all assets and property you own, including any assets you have transferred to another entity within a certain period of time. If you fail to include information when you file for bankruptcy and you do so knowingly, you can be guilty of bankruptcy fraud. The following is some information on bankruptcy fraud you should know about.
What Is Considered Bankruptcy Fraud?
Bankruptcy fraud is not inadvertently leaving out an asset. If you forget to report an asset during the bankruptcy filing, you can inform your attorney right away and the asset can be listed in your declaration. Unfortunately, some people attempt to hide assets from bankruptcy as a way to hopefully retain the assets instead of possibly losing them in the bankruptcy process.
People can commit bankruptcy fraud in several ways. If you hide anything with the hope to prevent it from being sold in bankruptcy, you are guilty of bankruptcy fraud. If you transferred property to someone else prior to the bankruptcy and you do not disclose it, you may also be guilty of bankruptcy fraud.
Other cases of bankruptcy fraud include submitting false documentation to the bankruptcy court, withholding documentation, purposely making a false statement in your bankruptcy paperwork, or paying someone to hide your assets from bankruptcy court.
You can also be guilty of bankruptcy fraud if you attempt to bribe a creditor to prevent filing a claim in the bankruptcy.
How Can You Avoid Bankruptcy Fraud?
If you think you want to file for bankruptcy, you have to adopt an attitude of transparency. The process of filing for bankruptcy can make you feel vulnerable, but you have to be honest about your assets with the court.
When you file for bankruptcy, you have to prepare to list all of your information. This includes your income, property sales, debts, creditors, and any donations or gifts you received or gave to another entity. Your attorney will advise you as to how much information you need to provide in your bankruptcy paperwork.
What Are the Penalties of Bankruptcy Fraud?
If you commit bankruptcy fraud, you can face civil penalties. In a serious case, the bankruptcy trustee may take your case before federal prosecution who will investigate and file a criminal charge.
Civil penalties include the forfeiture of your discharge rights. When you file for bankruptcy, you receive a clean slate financially. You no longer have to deal with your creditors filing claims against you or deal with any annoying collections calls and letters.
However, if you are found guilty of bankruptcy fraud, your discharges can be denied. Your creditors may then proceed to sue you for your debt, foreclose on your home, or otherwise collect on your debt.
You can also lose your exemptions. In bankruptcy, you can exempt some property so you can retain it after the bankruptcy is over. If you commit bankruptcy fraud, you could lose those exemptions. You then risk losing your exempt property to creditors.
If your bankruptcy fraud is so egregious that it goes before federal prosecution, you can face significant criminal penalties. This can include time in prison for up to five years. You also may receive probation and fines up to $250,000.
Bankruptcy is a complex and emotional process. However, do not make the mistake of trying to hide anything from your bankruptcy trustee. Your trustee’s job is to dig for all information pertaining to your assets, and it is difficult to hide anything.
The Madden Law Firm Attorneys at Law are here to help you with your bankruptcy so the process is clear and straightforward. Contact us today.
