The bankruptcy process helps people eliminate their debt while protecting their assets from liquidation. It is a tool that can be very useful to anyone who cannot find the means to get out of debt on their own. Bankruptcy laws have afforded individuals an opportunity to get out of a difficult financial situation when facing hard times. Some people, either intentionally or unknowingly, have committed bankruptcy fraud. Bankruptcy fraud is not handled lightly and offenders can face serious legal trouble.
Types of Bankruptcy Fraud
- When a filer withholds information about their assets, this is called concealment of assets. The bankruptcy court requires a debtor to list all of their debts and assets on the bankruptcy petition. These assets may be vulnerable to seizure and liquidation by the creditor in order to satisfy the debt. However, Texas is one of the most lenient states by allowing for the majority of people’s assets to be protected under certain bankruptcy exemption laws. This type of bankruptcy fraud is most often seen in business filings whereby the business hides certain assets in order to protect them from seizure or liquidation.
- If a debtor files for bankruptcy in more than one state, this is called multiple filings. The filer may use their information when filing for bankruptcy or may provide false information. Typically, the same assets are listed in each of the bankruptcy filings in efforts to protect them from being taken by the creditor. There are both state and federal bankruptcy laws that provide for the elimination of debt and may not necessarily put assets at risk of liquidation. Those who provide false information, or try to file for bankruptcy in more than one state are breaking the law. Anyone who has been convicted on bankruptcy fraud may be prohibited from filing for bankruptcy in the future.
- There has been an increase in the last type of bankruptcy fraud, in which the debtor steals the information of others to use on the bankruptcy petition. A person, or group of persons, scams people who are experiencing financial troubles by promising to protect them from eviction or foreclosure. The victim provides their personal information in return for the promise of eviction protection and the person who is running the scam, files for bankruptcy in the victim’s name. The scam costs the victim money by charging fees and ruins their credit by not resolving the debt issue. The victim ends up losing their apartment or house and is left with nothing.
The federal government is cracking down on bankruptcy fraud. The crime is considered a felony and offenders can serve time in prison and owe up to $250,000 in restitution payments. The bankruptcy process can be tedious, and to prevent unknowingly ending up an offender of the bankruptcy process your should contact an experienced bankruptcy attorney. Your attorney will help guide you through the process of eliminating your debt and returning to financial stability.