When an individual files for bankruptcy, they’re required to list all debt and all of the property they own and the assets they’ve transferred to others within a particular period. If an individual filing purposely omits required information while completing their paperwork or inappropriately uses the bankruptcy process to prevent creditors from receiving money they’d otherwise be entitled to, they may be found guilty of bankruptcy fraud.
Examples of Bankruptcy Fraud
There are many ways one could intentionally commit bankruptcy fraud, such as:
- Failing to list an asset on the appropriate bankruptcy schedule to prevent it from being sold for the benefit of creditors
- Concealing a property transfer that occurred before the bankruptcy (for example, failing to disclose gifting a car to a friend)
- Providing a false document to the bankruptcy court or trustee
- Destroying or withholding documents
- Knowingly making a false statement in the bankruptcy paperwork or to the bankruptcy trustee at the 341 meeting of creditors
- Paying someone to help hide property from the court
- Failing to disclose creditors
- Knowingly misstating facts
How to Avoid Bankruptcy Fraud
The best way an individual filing for bankruptcy can avoid bankruptcy fraud is by working with a bankruptcy lawyer and disclosing financial information transparently. Debtors need to list all:
- Income
- Property
- Creditors (even if the intention is to repay a particular creditor after the bankruptcy)
- Prior transactions (property sales, donations, gifts)
Individuals can know what they’re expected to disclose by reviewing the official bankruptcy paperwork.
Penalties
The consequences of engaging in such activities can be harsh. Anyone who makes a knowingly false statement in association with a bankruptcy filing can be assessed fines up to $250,000 and receive up to 20 years in prison.
Contact Us
Filing for bankruptcy? Make sure you’re working with an expert lawyer to ensure you’re on the right side of the law. Contact the Law Office of Larry Karandreas today.