It can happen to anyone. You owe a significant amount of money to someone and do not have the means to repay the debt or expect to have enough funds in the near future. You’ve probably wondered whether filing bankruptcy is the only plausible option. During a bankruptcy process, the court will liquidate your assets and disperse them to your creditors based on the level of claim they have against you.
Bankruptcy fraud is a federal crime, but what is it?
An experienced bankruptcy attorney will help you navigate the process smoothly, although bankruptcy fraud is an interesting complication that often appears in the news. Let’s examine what bankruptcy fraud is and how people can get themselves caught up in it if they don’t work with an experienced lawyer.
There are many forms of bankruptcy fraud that an individual can be charged with. Some charges can stem from attempting to conceal assets, and others can result from filing out false forms or using false information to complete required forms. For example, someone filing bankruptcy may transfer assets that have not been recorded to family or friends for safekeeping before the proceedings begin so that they can retain them after it is over. Another example would be false reporting home much money or assets you have in various accounts.
What things might constitute bankruptcy fraud?
While bankruptcy fraud charges can be filed for any type of deception during a bankruptcy proceeding, some of the most common causes of bankruptcy charges include:
- Failing to disclose all of your assets.
- Failing to disclose the true value of your assets.
- Obtaining massive amounts of credit right before filing.
- Not honestly answering the questions asked by the court, both during proceedings and on forms.
- Filing tax returns that conflict with your financial statements.
Bankruptcy fraud schemes
In some cases, bankruptcy fraud is not committed by the individuals but occurs in fraud schemes where individuals are lured in with the promise of helping them to make their debt problems go away. These are often referred to as petition mills, and victims are subject to high charges for the companies consulting services with the promise that the consultant will help them avoid bankruptcy. In these scams, the victim is usually bled dry and left in a worse situation than they started.
How to avoid bankruptcy fraud
Avoiding bankruptcy fraud is as easy as being honest with your attorney:
- Report all of your assets: Always provide honest information about all of your assets and property to your attorney. Don’t hide anything, even if it seems significant. Give everything to your attorney, and they will know exactly what needs to be included.
- Answer all questions honestly: Never give false statements in the documentation that you submit or statements that you give to the court. Also, be sure to answer all questions completely. Failing to answer questions can also constitute fraud.
- Let your attorney know if you have filed bankruptcy before: There are limitations on how many times you can file for bankruptcy protection and how long you have to wait before filing subsequent times. Let your counsel know immediately so they can determine the best course of action.
The best way to protect yourself from being charged with bankruptcy is to hire a trusted attorney who is experienced in bankruptcy law. They will let you know the best course of action, how to correctly fill out forms, and represent you in any court-related actions. Prepare yourself for the best possible outcome for your bankruptcy filing by hiring a qualified attorney.