Suspicious Actions In Bankruptcy

: Chris Lee Law Firm

  Filed under: Filing Bankruptcy

bankruptcy fraudIt is no secret that the bankruptcy process is packed full of very specific rules and guidelines. The detailed nature of the process can lead to mistakes that could jeopardize the outcome of the case. One example is engaging in certain actions that could be considered suspicious or even fraudulent in the eyes of the court.

An Open Book

Not many people set out to intentionally defraud the bankruptcy system, but it does happen. Even legitimate filers can end up in trouble over certain actions if they aren’t careful or educated about the process. A common example is transferring or selling off assets prior to bankruptcy. This is prohibited by bankruptcy laws and only approved if the debtor follows a very specific protocol. Another example is loaning money to a friend or family member before filing. While this may seem harmless, it could also be viewed as an attempt to hide or conceal funds from the court.

How do we avoid acting in suspicious or fraudulent ways? The answer is two-fold: First, freeze any unnecessary or uncharacteristic spending, selling or financial transactions ¬†within the 90 days prior to filing. This will eliminate the potential for any more debts to be accumulated, assets to be sold or hidden and changes to financial details to become arousing. Second, disclose everything to the court. Even if you have sold an asset, loaned money to a friend or family member or made uncharacteristic purchases to prior to filing, you may not be in trouble as long as you are open and honest with the court. Always divulge full details about your financial history when filing for bankruptcy, including all information even if you don’t think it is relevant. As long as the court sees you are being honest and attempting to cooperate, any mistakes on your part are likely to be viewed as accidental and not fraudulent.


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