When it comes to personal bankruptcy, most individuals and couples file
either Chapter 7 or Chapter 13 bankruptcy. The process of filing bankruptcy
involves a lot of paperwork, and debtors are required to provide details
about their personal income and debts.
Like mortgage loan applications, credit card applications, and applications
for immigration and government benefits, there is room for fraud when
people file bankruptcy.
When a debtor takes measures to conceal their assets, or when they file
multiple bankruptcies in different states, or when they try to bribe a
bankruptcy trustee, they commit “bankruptcy fraud.”
Bankruptcy fraud is a type of
white- collar crime, and it comes in these basic forms:
- Concealing assets from the bankruptcy court
- Intentionally filing false forms
- Knowingly filing incomplete forms
- Filing multiple times in different states and providing real or false information
- Trying to bribe a court-appointed bankruptcy trustee
Often, when a debtor commits bankruptcy fraud, he or she will commit one
of the above forms of fraud while committing another type of fraud, such as
mortgage fraud, identity theft, or
Of the different types of bankruptcy fraud, the most common type is “concealment
of assets.” In bankruptcy, creditors can liquidate a debtor’s
assets in order to pay off debts. However, only those assets listed by
the debtor can be liquidated.
So, a fraudster will go to great lengths to conceal assets so they remain
inaccessible by creditors. To conceal one’s assets, a debtor may
transfer them to friends or relatives so they cannot be found by the bankruptcy court.
Bankruptcy Fraud is a Federal Crime
Bankruptcy fraud is a federal crime under
18 U.S. Code § 151 and
18 U.S.C. § 152, and is punishable by up to a $250,000 fine, or up to five years in federal
prison, or both.
Are you accused of committing bankruptcy fraud?
Contact our firm today to meet with a
Plano criminal defense attorney!