Though filing bankruptcy comes with fear attached on many occasions after the fear often comes a sigh of relief. Although a vast majority of bankruptcy cases are lawful and done for legitimate reasons, there are some cases that involve fraud. Bankruptcy fraud is often committed in tandem with other financial crimes such as filing in multiple states or stealing credit card numbers. It is, comparatively, a simple crime to commit.
Punishment for bankruptcy fraud is severe, and since all of the paperwork required contains exhaustive information regarding the types of fraud and the penalties for them, it is very difficult if not impossible to plead ignorance. Once a bankruptcy trustee suspects a client of fraud, that party is free to compel testimony from anyone at all.
Hiding or Concealing Assets
If you are caught transferring ownership of property of any kind to family or friends in an effort to hide assets, you could receive jail time. You must be accountable for all of them, and you can leave nothing out.
When a bankruptcy is filed, investigators search every asset you posses or will possess, and a full explanation is demanded from you. Hiding anything of any value in order to regain possession of it after the bankruptcy is finalized is illegal.
Credit Card Fraud
If you were thinking of getting a credit card just before you declare bankruptcy and fill it with purchases, believing it would be paid off with the bankruptcy, think again! Once bankruptcy is filed, all of your spending records are taken into account, and such irresponsible spending can lead to your request to be denied.
Alternatively, the charges you incur could be considered non dis-chargeable, which would mean that you would still have to pay the debt. Once bankruptcy proceedings are over, the bankruptcy trustees will tell you for what you may or may not spend money, and how bills will be paid.
Intentionally Filing Incomplete or Incorrect Forms
It is of the utmost importance that your forms be filled out honestly, thoroughly, and correctly. It is very important to have a good bankruptcy lawyer help you fill out forms, answer your questions, and tell you what financial information needs to be included in your documentation.
If there is a mistake on the form, it quickly becomes a red flag and an issue. There is also the possibility that you won’t be able to prove that the mistake was genuine. Giving false answers on any bankruptcy form could get you prosecuted for bankruptcy fraud so run everything by a bankruptcy lawyer before submission.
Filing Bankruptcy in Multiple States with False or Real Information
Whether you use genuine or false information, filing bankruptcy in multiple states is illegal and constitutes bankruptcy fraud. This crime carries a sentence of up to five years in prison, a heavy fine, or both. These multiple filings can slow down the court’s handling of a bankruptcy and the discovery of assets the debtor may be hiding. If you have ties to more than one state, consult your lawyer on the correct procedure to take.