Understanding Bankruptcy FraudThursday, August 15th, 2019, 9:01 am
Filing for bankruptcy can be a good option for a number of people, but the process only truly works if you’re completely honest about your financial situation and your assets. If you’re not, you’re committing bankruptcy fraud, and that can lead to a number of large fines or even jail time. But what is bankruptcy fraud? If you don’t know what it is, it’s possible you could commit it without realizing what you’re doing.
Assets and Bankruptcy
Before going into the details about bankruptcy fraud, it might help to know why people commit it. In both Chapter 7 and Chapter 13 bankruptcy, exempt assets (those not needed to maintain your household and job) can either be sold to cover your debts or are used to determine how much you will repay your creditors. In most cases, the more nonexempt assets you have, the more you pay. Some people may not want to see their possessions sold off in Chapter 7 or want to avoid creating large repayment plans for Chapter 13, so they don’t disclose everything.
Ways Bankruptcy Fraud is Committed
While most people going through bankruptcy are honest and truthful, not everyone is. If you conceal any assets from the court, even if you accidentally forget something, it’s bankruptcy fraud. This can also include concealing financial transactions. For example, if you knew you were about to go into bankruptcy, it can be tempting to transfer ownership of real estate, vehicles, and other large assets to someone else. However, you must disclose that you did this, even if you did so before starting the bankruptcy process.
Withholding financial documents, destroying records, lying on any paperwork or to anyone involved in the bankruptcy process, or doing anything else to hide assets is considered bankruptcy fraud.
Some Fraud Happens Before the Court Process
You can also be accused of bankruptcy fraud if you run up a large amount of credit card bills and other debts knowing that you’re about to file bankruptcy. This is known as presumptive fraud because you took on the debt knowing you couldn’t pay it back and that you were going to file bankruptcy.
If you’re going through the bankruptcy process, you want to have a legal expert on your side to avoid accidental fraud and to make everything easier to navigate and understand. The professionals at Michael F. Kanzer & Associates will be with you every step of the way. Contact us today to discuss your bankruptcy needs.
Category: Bankruptcy Law