Do You Know How Bankruptcy Fraud Works?

Maybe your financial health has taken a series of hits lately, leaving you in dire financial straits. While you know that filing for bankruptcy is an option, you may feel hesitant about losing some of your treasured items. You could “accidentally” leave off certain assets, or “forget” about them altogether.

Before even thinking of committing bankruptcy fraud, understand how HowStuffWorks defines it. What you may consider as a harmless omission the law could classify as blatant fraud.

Types Of Bankruptcy Fraud

The most prevalent form of bankruptcy fraud is intentionally hiding assets, which includes temporarily transferring possession of assets to friends or family. Filing for bankruptcy in several states is another form of fraud, one that impedes proceedings and asset liquidation. Other examples include bribing a court-appointed trustee, opening a business with the intention of buying items on credit and intentionally leaving questions on a bankruptcy petition blank.

Note that if neglecting to claim an asset was a genuine oversight, the act is not fraud. It is the intention that acts as the line between an honest mistake and deliberate fraud.

Identifying Bankruptcy Fraud

Know that you are not the first person to think about committing bankruptcy fraud, which means that agencies like the FBI and the IRS are on the lookout for blatant misdeeds. Additionally, task forces and fraud groups also remain on the lookout for potential fraud.

Penalties For Bankruptcy Fraud

Those found guilty of bankruptcy fraud often face jail time, community service and restitution payment. Additionally, this type of fraud often results in increased loan and credit card fees for all citizens, even higher taxes.

Should you ever find yourself accused of bankruptcy fraud, consulting with a legal professional is your most favorable bet. No matter the final verdict, you still have rights to protect.

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