Many people seeking bankruptcy protection may not be aware of the amount of details required in the filing process. Because the bankruptcy court requires numerous details about your finances, filing for bankruptcy can be a cumbersome task. Unfortunately, many people end up committing bankruptcy fraud unknowingly, and risk losing their case or facing criminal charges.
What Is Considered Fraud?
The most common type of bankruptcy fraud is withholding or omitting information about one’s assets. Many people fear losing their assets during bankruptcy and may purposely leave out certain assets on the bankruptcy petition. The bankruptcy court requires accurate information about all of your finances in order to process your bankruptcy case. If any of this information is missing or withheld, your case may be dismissed and you risk facing criminal charges.
Transferring assets is another common problem found among some bankruptcy filers. Bankruptcy laws will not allow you to give away your assets to friends or family members before filing for bankruptcy. Many people assume they can give their assets to another person before they file for bankruptcy, and get the assets back after their case has been discharged. However, you are allowed to sell your assets as long as you receive fair market value for the assets and claim the money received as an asset in the bankruptcy petition.
What Should I Do?
The bankruptcy process can be complicated and requires numerous steps before debts can be discharged, which is why anyone seeking bankruptcy protection should be advised by a bankruptcy attorney. An experienced bankruptcy attorney can help review all of your information and ensure your information is accurate before you file.
If you left out any information, or something changes about your financial situation, request an amendment to the petition and add it to the information provided to the court. Always be honest about your debts and assets, don’t try to hide anything from the court. In fact, many states offer bankruptcy exemptions that can protect many of your assets during the process. Remember that bankruptcy is a privilege, not a right; and abusing the protections offered through bankruptcy can lead to more significant consequences.