Line Between Bankruptcy Fraud and Legal Bankruptcy Planning

When filing for bankruptcy, it is important to know the laws surrounding what you must report and what constitutes bankruptcy fraud. During bankruptcy, a debtor is absolved of debts due to Insolvency. If a debtor conceals money, property, or other assets during the bankruptcy process, he can be charged with fraud, which is a federal crime.

Using the bankruptcy system to fraudulently gain assets or retain them, can lead to criminal charges including bankruptcy fraud. This is a serious federal offense.

Concealing Assets

Concealing assets during the bankruptcy process by hiding them in accounts held in others names, or concealing assets in other ways constitutes bankruptcy fraud. Transfers of funds or assets that took place just prior to filing bankruptcy are likely to be red flags alerting the government that foul play may be at hand. Any such transfers may bring about an investigation of a bankruptcy case by the federal government. You are required to disclose all of your assets during bankruptcy. Failing to do so may result in fraud charges. Concealing of assets is the most commonly found type of bankruptcy fraud.

Multiple Filings

When a debtor files multiple bankruptcy petitions, in one state or in multiple states, fraud may be suspected. Especially when filing multiple claims, it is essential to seek the counsel of an attorney to make sure that such filings are within the law. Bankruptcy law is complicated, and where multiple bankruptcy filings are involved, disclosure of assets and other requirements become even more important. This type of bankruptcy fraud also covers the case where a debtor files multiple claims using more than one identity. Using a false identity is in and of itself illegal. Doing so during a bankruptcy proceeding constitutes fraud on the bankruptcy court and is likely to lead to fraud charges.

Punishment

Bankruptcy fraud is a felony. If convicted, you may face up to five years in prison and be fined up to $250,000. Depending on the extent of the fraud, multiple counts may be charged, and may lead to even more severe punishment.

Getting Legal Help

By seeking proper assistance during the filing you should be able to avoid fraud charges if you disclose all of your financial information including all property holdings and assets at the outset. If you have been charged with fraud, or are concerned that you may be, it is a good idea to discuss your situation with a criminal defense attorney. Bankruptcy and bankruptcy fraud are important legal issues that are best handled with the guidance of an attorney educated in the area.

Talk to a Bankruptcy Lawyer before making any attempts to plan or file for bankruptcy. The most important part of any bankruptcy case is the legal planning before the petition is filed, so it's important to get good legal advice.