Bankruptcy fraud is any behavior that violates existing bankruptcy laws or takes advantages of loopholes in those laws as a means of abusing the system. Bankruptcy fraud is a felony in the United States and comes with a fine of up to $250,000 and/or a jail term of up to five years. Given the severity of this infraction, it is crucial you work closely with your bankruptcy attorney to ensure all laws are being followed and all information is being submitted accurately and honestly.
There are four primary types of bankruptcy fraud, and each of these is considered equally serious:
- Hiding Assets This is the most common type of bankruptcy fraud. Individuals filing for Chapter 7 or Chapter 13 bankruptcy try to hide certain assets from the courts. They will often transfer ownership of property to another person, or they will conceal funds in a bank account they then omit from their bankruptcy filings. Their goal is to reclaim these assets once the bankruptcy has been discharged by the courts.
- Falsifying Forms Bankruptcy forms need to be completed to the letter of the law, and they need to account for every penny you have and every penny you owe. Purposely submitting false information—whether to make your financial situation look better or worse than it actually is—is strictly prohibited. While it may be difficult to face your financial reality in these forms, it is essential they are submitted honestly to the bankruptcy courts.
- Multiple Filings Some fraudsters will try to file bankruptcy multiple times. They may try to do this under their own name with their own identifying information, or they may use pseudonyms or fake information to file multiple times. Someone engaged in this type of fraud could conceivably attempt to file in different locations as well. There are strict laws governing when and how often an individual can file bankruptcy, and this is an egregious violation of these rules.
- Bribing the Trustee Every bankruptcy is overseen by a bankruptcy trustee, appointed by the United States Trustee Program. This individual gathers all the necessary information related to your debt. Trying to bribe your trustee, for whatever reason, is a form of fraud and will jeopardize both your bankruptcy case and, possibly, your freedom.
Bankruptcy attorney Rafael Gil III of The Gil Law Firm has been serving the Dothan, Alabama, area for more than 17 years. Call (334) 673-0100 or visit his firm online to learn more about any of their services or schedule an appointment with Attorney Gil; you can also follow them on Facebook and Twitter. By understanding the basics of bankruptcy fraud, you can make sure your own bankruptcy is above-board, smooth, and stress-free.