When you filed for bankruptcy, it may be required that some of your assets be sold off, with the proceeds used to pay creditors. Bankruptcy fraud arises when the petitioner employes falsehood or otherwise deliberate attempts to mislead the bankruptcy court during the bankruptcy process.
Forms of bankruptcy fraud include:
Asset concealment usually involves deliberately failing to provide all the information concerning your assets with the aim of preventing the bankruptcy court from liquidating those particular assets. Concealment may also involve the transfer of ownership of some of their assets to relatives or friends with the hope of hiding the same from creditors. Concealing assets prevents creditors from making the recovery that they would have otherwise received had the concealed assets been properly declared.
In the event that a debtor mistakenly omits some assets in their declaration, the trustee should be contacted when the omission is recovered in order to try to correct the mistake.
Multiple application for bankruptcy refers to the filing of bankruptcy in more than one state, using real names or aliases as well as real or falsified documents. Perpetrators of this form of fraud have may also conceal details of their assets with the goal of preventing the their assets from being liquidated to clear debts.
Bankruptcy petition mills typically target tenants in poor neighborhoods who are on the verge of being evicted from their homes. Targeted homeowners are lured into hiring a typing service that promises to help them avoid eviction. The typing service proceeds to file for bankruptcy on behalf of the tenant without their knowledge or consent at inflated fees. The victim only discovers the fraud when their savings have been wiped clean and are they left with a bad credit and an inevitable eviction.
Incomplete and False Paperwork
It is important that those filing for bankruptcy fill all the related paperwork, provide accurate information concerning creditors, all assets and liabilities, financial standing among others. The paperwork once completed should be reviewed to ensure accuracy and completeness. Presenting incomplete or false information mislead the bankruptcy court into declaring you bankrupt when you are not in fact eligible for bankruptcy.
Once filing of bankruptcy is completed the court appoints an official called a trustee to handle the matter. It is important that the relationship between the applicants remains strictly professional. Any attempts to favors, financial or otherwise calculated to influence the decision of the trustee is totally and unacceptable and constitutes bankruptcy fraud.
Credit Card Fraud
The making of purchases using credit cards before or after filing for bankruptcy may constitute bankruptcy fraud. If such credit card purchases are discovered by the appointed trustee they may be cause for denying the petitioner's request for bankruptcy.
Offenders found culpable in cases of bankruptcy fraud may end up serving prison terms of up to 5 years, paying hefty fines or even probation