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Bankruptcy Fraud

When you file for bankruptcy, you are expected to make a list of all of the assets and property that you own. If you do not submit this information, then you could be charged with bankruptcy fraud. Bankruptcy fraud is taken seriously.

When you file for bankruptcy, it frees you from the burden of having to pay debts. However, it is costly to your debtors. Bankruptcy law allows your creditors to recoup losses by collecting property. You can keep the assets that you need to maintain a household or job.

If you file for Chapter 7 bankruptcy, then the bankruptcy trustee can sell your property and distribute the funds among your creditors. Chapter 13 bankruptcy does not work like this. You will set up a payment plan for the next three to five years. The total payment will be equal to the value of your non-exempt property.

Ways People Conceal Property When Filing for Bankruptcy

Most people are honest when they file for bankruptcy. They list all of the property and assets that they own. Here is a list of actions that can be considered fraudulent activities.

  • Not putting down all of your assets
  • Providing false documents to the court or bankruptcy trustee
  • Withholding or destroying documents
  • Paying someone to hide the property
  • Hiding a property transfer

How People Commit Fraud Before They File for Bankruptcy

Many people commit fraud before the bankruptcy proceedings begin. Here is a list of ways that people commit fraud before they file for bankruptcy.

  • Writing a bad check
  • Misrepresenting income or assets in order to obtain credit
  • Getting credit with no intention on paying it back
  • Buying a luxury item before filing for bankruptcy
  • Engaging in a deceptive business practice

Bankruptcy Fraud Defenses

It is estimated that 70 percent of people who commit bankruptcy fraud do so by undervaluing or hiding an asset. They do this so that the property cannot be seized. People can also commit fraud when they lie about their income. This is the second most-common way that bankruptcy fraud is committed.

They do this in order to qualify for Chapter 7 bankruptcy. They may also do this in order to qualify for lower Chapter 13 bankruptcy payments. People who are accused of bankruptcy fraud do not have to prove that they are innocent. However, the government has to prove that the person actually committed the crime.

The following defenses can be used.

Mistake

The defendant can say that they did not intentionally hide their assets or property. They can also say that their attorney did not know about the missing information.

Legitimate Purpose

The defendant can say that there had a legitimate reason to hide their assets and property. For example, they may have sold the asset to take advantage of the tax benefits.

Statute of Limitations

The government may lose their right to prosecute if the Statute of Limitations has expired. In most cases, the Statute of Limitations is five years.

Renunciation or Withdrawal

The defendant can prove that they corrected the paperwork after the error was discovered.

The Importance of Getting Legal Advice

The penalties that you can face for bankruptcy fraud can be steep. For example, you could spend up to 20 years in federal prison. You may also be required to pay restitution or do community service. That is why it is important to get legal advice. Your attorney can tell you about your legal rights. They can also tell you about the defenses that you can use.

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Manhattan

85 Broad Street, 30th Floor
New York, NY 10005

Phone

888-977-6335

Queens

35-37 36th St,
Astoria, NY 11106

Phone

888-977-6335

Brooklyn

195 Montague St.
14th Floor,
Brooklyn, NY 11201

Phone

888-977-6335