Bankruptcy Fraud: When is it Committed?

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Bankruptcy fraud usually occurs when one of four types of crimes occurs. These may include someone owing money concealing his or her assets for they arenít taken when declaring bankruptcy, falsification of forms being filed, multiple filings with false data or a bribing of a court official.

When starting the bankruptcy procedure, it is important to ensure the fields have the correct and valid details. Knowingly falsifying these documents may see someone imprisoned or going to jail for perjury. It is also possible to face the same charges being issued when more than one filing occurs either with truthful or incorrect data over multiple jurisdictions. Bribing a court official could lead to several charges based on other factors.

When someone commits bankruptcy fraud, he or she may be penalized and punished by the law through criminal charges with the crimes left on his or her record. This may prevent him or her from being able to file legitimate claims for bankruptcy in the future. Additionally, if the person was able to file successfully in multiple jurisdictions, he or she could be facing numerous charges that could compound the judgment and sentencing. It is essential to ensure all fields have accurate information, that the applicant has supplied honest documentation and only files for bankruptcy once. If charges are issued for fraud, a lawyer should be hired to assist with the matter from the beginning.

Bankruptcy Fraud Explained

Almost three-fourths of all fraud involving bankruptcy is due to the concealment of various types of assets from someone or an entity such as the government. The person that is claiming bankruptcy attempt to hide his or her property, monetary accounts and other assets from creditors and lending institutions by not listing them so they cannot be taken or used to pay off the debts accrued. This could also occur through transferring the funds to friends, family and other connections so they cannot be discovered as his or hers. This is fraudulent concealment and could lead to further complications if the money or property is discovered.

Petition mills are a scam used to file bankruptcy on behalf of someone else while posing as a financial consulting agency to assist with negotiating services and attempting to help with debts. These companies charge the person excessively and may leave the person in further debt once theyíve completed these actions. This is different from when the person files for bankruptcy in multiple jurisdictions with the same information or falsifying records. This process is not considered illegal, but it could be a violation of provisions, and it is criminal when using invalid data or if assets are being concealed in some manner.

The Legal Consequences of Bankruptcy Fraud

When bankruptcy fraud occurs, prosecutors working for federal branches of the government may bring criminal charges for federal crimes if the person is suspected of these illegal deeds. Proof may be provided to the courts through the knowledge and intention of misrepresenting the facts on forms. Intention may be difficult to prove, but when someone fills in the fields with data that cannot be correct, it is less complicated for the judge or jury to decide. For standard bankruptcy conviction, the sentences often are up to five years behind bars and there could also be a $250,000 fine attached to the sentencing. Even if the bankruptcy fraud is not completed, the intention to do so may be punishable through a court case.

If someone is the victim of these crimes, he or she may bring a civil lawsuit forth to be compensated for the action. This means that another claim on top of criminal court cases could be initiated for damages owed to the victim. The person must show the judge or jury that the perpetrator caused harm through his or her actions and this led to the injury such as physical harm or economic damage. The conviction of civil cases does not depend on criminal court outcomes, so the individual may face two separate events with the same or different convictions and sentences.

Legal Help with Bankruptcy Fraud

Most cases that transpire involving bankruptcy fraud are due to the intentional act to commit the crime. If this is absent, the person that has been accused could be innocent of the event. This means that he or she should have a lawyer with expertise in federal bankruptcy criminal activity for a better chance at success to avoid conviction. This may be proven through the forms or with character witnesses.


Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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