What is the Definition of Bankruptcy Fraud?

Bankruptcy was established to assist those in seriously difficult financial circumstances, offering them the opportunity to start anew. However, some people try to manipulate the bankruptcy process by committing bankruptcy fraud. A crime, bankruptcy fraud is punishable by law. Offenders have committed a felony and may owe as much as $250,000 in addition to prison time. There are five types of bankruptcy fraud.

False Information

If a filer is intentionally dishonest when filling out bankruptcy forms, the filer is committing fraud. This is an attempt at misleading the courts. In some states, providing false information falls under perjury. (For more information on Minneapolis bankruptcy law and fraud, contact a Minneapolis bankruptcy attorney.)

Concealing Assets

This is the most frequently-occurring form of bankruptcy fraud. Nearly 70% of bankruptcy filings listed as fraudulent concern concealment of assets. If you file for bankruptcy but fail to provide information about all of your assets, you are committing fraud. Some people avoid listing assets because surplus assets may be sold to pay Bankruptcy creditors. This happens when the debtor simply does not list the assets or relinquishes assets to someone else. To ensure that all assets are properly listed on bankruptcy paperwork, have a Minneapolis bankruptcy lawyer review all documents.

Filing for Bankruptcy Multiple Times

It is considered fraud when a debtor files for bankruptcy in multiple states. Filers sometimes provide information such as false social security numbers on one or more forms. Often times, those committing this type of fraud also conceal assets on both bankruptcy petitions.

Petition Mills

When a debtor faces losing her home, she may fall victim to petition mills. These businesses target those facing eviction and claim to help, but instead of helping, obtain the debtor’s information and file a bankruptcy in the client’s name. This is done without the debtor’s knowledge. The petition mills deliberately extend the case and charge fees to the debtor, resulting in further loss and often homelessness.

Bribes

Bribing any official appointed by the court is illegal; this includes court-appointed bankruptcy trustees. When bankruptcy trustees are the target of bribes, it is considered bankruptcy fraud.

The bankruptcy system is meant to provide those in real trouble with a new start and a means of re-finding financial success. It depends somewhat on the faith of bankruptcy applicants. Unfortunately, some do manipulate this process, which is meant to help those in unfortunate circumstances. Paperwork costs, investigations and legal fees hurt everyone—including the American taxpayer.

To avoid complicating the process (even unintentionally), consider hiring a Minneapolis bankruptcy lawyer. A reputable lawyer can assist you in navigating this process and can help you provide thorough and accurate information when filing.

No related posts.

Related posts brought to you by Yet Another Related Posts Plugin.