If you are considering filing for bankruptcy, you want to be sure that you take the right steps before filing. In fact, taking the right steps will help you avoid common mistakes and fraud. Here’s what you need to know:
First, What is Bankruptcy Fraud?
Bankruptcy fraud can be unintentional or intentional. If you are found to be dishonest before or during the bankruptcy process, you could face serious consequences.
Recently, a Pennsylvania debtor was indicted by a federal grand jury for concealing assets during the bankruptcy proceeding. This debtor concealed a sizable inheritance. If found guilty, the debtor can face up to five years in prison as a maximum sentence.
So, it is important to disclose all of your financial information to your attorney while preparing for your bankruptcy and during the bankruptcy process.
What Kind of Fraud Can Occur Before Bankruptcy?
Pre-bankruptcy fraudulent behavior can include the following situations. Any of these situations may result in a creditor asking the court to deny your discharge of a particular debt. This will mean that you still owe it after your case ends.
- Using incorrect information about income or assets to obtain a loan or credit
- Misrepresenting or falsifying financial documents
- Making credit purchases with no intention or repaying.
- Writing a bad check knowingly
- Purchasing luxury items before your filing
- Taking out large cash advances before your filing
- Using deceptive business practices
Keep in mind that all of the above can be avoided and discussed with your attorney. Your bankruptcy trustee will take the time to investigate any fraud claim.
What Kind of Fraud Can Occur During Bankruptcy?
You can avoid the following situations in your bankruptcy by working with your attorney. The following examples will be considered a problem and lead to a fraud accusation:
- Omitting an asset to prevent its sale through the bankruptcy
- Hiding a property transfer (Click here for additional bankruptcy mistakes to avoid)
- Provide false documents to your trustee or the court
- Withholding or destroying documents
- Hiding property from the court or paying someone to help hide property
- Making false statements on purpose in paperwork or hearings
You Can Avoid Bankruptcy Fraud
You can avoid any trouble by being open and honest with your attorney and the court. Bankruptcy fraud is typically done intentionally. In the event you forget to list an asset or expense, you likely will not be found guilty of fraud. Your attorney can help you make amendments to your case if you come across something you forgot to add. On the other hand, purposely hiding an asset, filing a false form, or committing perjury is very different.