Bankruptcies are filed under federal law in federal court, therefore any attempt to defraud the court is a federal crime. The penalties for bankruptcy fraud include up to five years in prison and/or costly fines. There are many different reasons a bankruptcy trustee may suspect a filer is trying to commit bankruptcy fraud. The best way to avoid such accusations is to always be completely honest with the court and to have an experienced bankruptcy lawyer helping you with your case.
Types of Bankruptcy Fraud
The following are some common types of bankruptcy fraud:
- Making false statements—Making false statements is not only considered perjury when you speak during court hearings, but also in every piece of paperwork that you file with the court. This means that if you fudge financial details or fail to list even a closed account on your bankruptcy schedules, you could be suspected of perjury.
- Credit bustout—This occurs when a person plans on filing bankruptcy, so they use as much credit as possible through cash advances or purchases in a short amount of time because they know they will try to discharge that debt in bankruptcy.
- Concealing assets—Bankruptcy filers must report all assets so the bankruptcy trustee knows what is available for liquidation. Some filers may be tempted to try to hide assets that do not qualify for exemptions by transferring moneys or stocks into someone else’s name or failing to report incoming life insurance, pension, or inheritance payments.
- Serial filing—Some people file for bankruptcy numerous times in order to make use of the automatic stay to stop repossessions, foreclosures, collections, or evictions. Often these repeat filing use false information, such as social security numbers, to conceal serial filings.
Even if you do not mean to commit fraud, an unintentional mistake or omission may place you under suspicion of the bankruptcy trustee for bankruptcy fraud. Having an experienced St. Louis bankruptcy attorney handling your can ensure that all paperwork is completed thoroughly and accurately, so you never have to worry about fraud allegations. If you are considering filing for bankruptcy, call the Law Office of Kenneth P. Carp at 636-947-3600 for assistance today.