When you file for either Chapter 7 or 13 bankruptcy, you’re required to list every single property that you currently own, along with transferred assets within a specific period. If you fail to supply the necessary information when completing bankruptcy forms, you could be charged with bankruptcy fraud.
How Does Bankruptcy Work?
Bankruptcy enables debtors to discharge certain debts, but this relief comes at the cost of the debtor’s creditors. You’ll get to keep or exempt assets you might need for maintaining a household and a job, but your remaining assets would be transferred to your bankruptcy estate, which would be used for compensating your creditors.
With Chapter 7, the bankruptcy trustee appointed by the court would oversee your case, sell all nonexempt assets in your bankruptcy estate, and allocate them to your creditors. With a Chapter 13 on the other hand, your trustee won’t sell your assets, but you’ll need to pay your creditors the value of your nonexempt assets through a three- to five-year plan.
What Exactly is Bankruptcy Fraud?
While most individuals who file for bankruptcy are honest and direct about their assets, many prominent bankruptcy attorneys in Salt Lake City say that this isn’t always the case. They add that if an individual failed to disclose some assets, the filer could be charged with bankruptcy fraud.
Below are some actions that the court might consider fraud when done intentionally:
- Not listing all your assets on the correct bankruptcy schedule
- Concealing an asset transfer that happened prior to bankruptcy
- Making fake documents and withholding or destroying authentic documents
- Paying another individual to help you conceal assets from the bankruptcy court
Take note that the penalties for the abovementioned activities could be extremely severe, including up to 20 years of imprisonment and costly fines as much as $250,000.
Other Vital Things to Note
You should also be aware that sometimes, bankruptcy fraud is not connected directly to a bankruptcy filing. It could likewise happen prior to you filing your case. For instance, the following are examples of activities that a creditor might consider fraudulent behavior and cause them to request that the court deny the discharge of your debt:
- Purchasing expensive stuff on credit prior to filing
- Overstating your income when you apply for credit
- Intentionally writing a check that you know would bounce
In the event that you believe a creditor or bankruptcy trustee might accuse you of these fraudulent activities, you need to obtain help from an experienced bankruptcy attorney to review your case to ensure that you won’t get in trouble with the law.