Actions That May Lead To Bankruptcy Fraud

Filing for bankruptcy is riddled with guidelines and rules that are important to the outcome of a successful case. Besides being denied for a debt discharge, some people may find their case dismissed or even charged with fraud if they violate certain rules. Anytime filing for bankruptcy is being considered it is important to review the requirements and steps of the process with a qualified bankruptcy attorney.

Fraudulent Actions

One of the most common actions people take that could lead to suspicion and/or conviction of fraud is selling or giving assets away prior to filing. Although laws do allow a debtor to sell some assets prior to filing, they must follow strict rules. First, the asset must be sold for fair market value without the intent of buying back the asset after bankruptcy. Second, the income from the sale of the asset must be reported to the bankruptcy court. Giving, transferring or withholding information about assets is strictly forbidden. Further, lying about any debts, assets, financial details or filing under false pretenses or personal information may also be considered fraudulent.

A less common type of bankruptcy fraud occurs when a debtor fails to mention future income or the potential for an expected increase in income is not reported to the court. Payouts from investment accounts, pending payments on a prior claim and inheritance money are common examples. These are considered to be income even though the debtor has yet to take possession of the monies.  Information related to any type of financial details past, present or future are required to be reported to the court.