Whether you’re filing Chapter 7 or Chapter 13 bankruptcy, you should be as honest as possible about your debts to avoid serious consequences. However, there are many people who purposely omit certain information when they are filling out these forms. To understand bankruptcy fraud, the attorneys at The Gil Law Firm in Dothan, AL, share some details below.
A Guide to Bankruptcy Fraud
What Is Considered Bankruptcy Fraud?
Under 18 U.S.C. § 157, a person is prohibited from devising or intending to devise a scheme to defraud and taking any one of fraudulent actions. In general, the four most common kinds of fraud involve attempts to hide assets, intentionally filing incomplete forms, bribing a bankruptcy trustee, or filing for bankruptcy multiple times in different states using more than one identity.
Why Do People Commit Fraud?
Bankruptcy fraud applies to intentional actions, not honest mistakes. Bankruptcy is intended to let people resolve debts by paying only a portion of the actual amounts owed, but many instances of fraud involve people trying to find creative ways to keep assets they must relinquish.
How Are People Punished?
Prosecution for bankruptcy fraud is relatively rare. According to the Internal Revenue Service (IRS), the United States Bankruptcy Court reported over 860,000 filings in 2015, but they initiated only 28 investigations and sentenced just 11 people for bankruptcy fraud.
A conviction carries the possibility of a sentence of five years in prison. Alleged offenders can also be ordered to pay a fine of up to $250,000. Certain people must also pay restitution or perform community service. Since bankruptcy fraud is a federal offense, a conviction can have adverse effects on a person’s right to vote, travel internationally, or possess a firearm.
If you are planning on filing Chapter 7 or Chapter 13 bankruptcy in Alabama, Georgia, or Florida, make sure you’re working with an experienced attorney. The Gil Law Firm has helped thousands of clients successfully file bankruptcy and get fresh financial starts. Visit the website to learn more about their practice areas. Call (334) 673-0100 to schedule a free consultation.