Managing financial matters can be tough. People need to be aware of the details both large and small that go into making sure that all bills of their are paid. It’s entirely possible for circumstances to change drastically from one week to the next. Someone can lose a job they rely on for the majority of their income. Another may face medical bills that keep piling up in the event of a chronic illness. People can get divorced and no longer have two incomes coming in the household budget. Each person faces differing financial circumstances. The law recognizes that people can fall behind in their bills. This is why the law allows for legal avenues in which people can explore the possibility of discharging their bills legally. The law recognizes that people should not forever have their lives destroyed by the looming threat of bills they cannot pay. Laws also recognize the reality that when lenders lend people, they are taking the risk they will not get their money back.
Declaring Bankruptcy
The legal process of discharging one’s debts is known as bankruptcy. Bankruptcy means that an individual is no longer able to pay their debts and would like to end the legal obligations to their creditors. Declaring bankruptcy is a serious matter with many possible and potentially negative implications. Someone who chooses this strategy may face all sorts issues going forward. For example, they may see a vastly lowered credit score. This can impede their ability to buy a house, rent a car or even get promoted at work. However, some people simply have no choice. In that case, they need to be mindful of the process of bankruptcy. They must make sure they are doing so in accordance with all laws that may apply to their particular case.
People who choose this course of action need to be aware of the details of the process. A violation of the accepted standards of behavior can lead even greater possible consequences. When people declare bankruptcy, they are not free of all obligations to their creditors. Creditors are entitled to recover a certain level of income as well as a portion of your assets. If you minimize your assets in some way or fail to declare them, you might be guilty of engaging in bankruptcy fraud.
Some of your assets are exempt from all creditors. You are allowed to keep certain things such as clothing and transportation so you can get to work. You’re also allowed to keep a roof over your head. Items do not fall into such categories are deemed part of what considered under law to be a bankruptcy estate. As part of the process, you will be asked to work with an outside supervisor. Depending on the kind of bankruptcy you’ve chosen, the trustee may choose to sell off the estate and give the creditors the remains. You can also choose a form of bankruptcy that lets you set up a plan that goes anywhere from three to five years and repay the creditors during this time.
Bankruptcy Fraud
Bankruptcy fraud happens when you do not reveal the extent of your assets. Someone might have not have listed all their assets and thus prevented them from being sold to benefit the creditors. Another person may have provided false documents about their assets to the courts or have shredded documents about their assets so they are harder to trace. A person may have also made a false statement. The person may also have colluded with another person to conceal their assets such as giving that person several cars they own while still retaining the ability to drive those cars. In each instance, the person is willfully refusing to disclose the extent of their income or assets to the court system and the trustee in charge of making sure that creditors are paid as much as possible under law.
Given how many laws must be followed under law and how stressful the process of declaring bankruptcy is, it can be very easy to make a mistake. This is why it s best to work closely with an attorney. A lawyer can help anyone sort out all issues related to any kind of bankruptcy filing. They will examine all documents to see that they are filed correctly. Lawyers can also provide people with advice about what must be included and what is considered their own property. They can also help people in the event that a mistake was made. Someone who is facing possible charges of bankruptcy fraud can be facing the revocation of this course of action. They can also face other problems such as fines and even the possibility of jail time. A great lawyer can help make sure all is filed completely correctly.
Most times, the federal courts will prosecute bankruptcy fraud as a white-collar crime. Normally, a white-collar crime doesn’t involve violence, but the criminal act could mean large sums of cash were stolen using one method or another—in this case, it’s bankruptcy fraud. Statutes mean that Congress has passed laws around a specific topic like bankruptcy.

Under 18 U.S. Code

In most cases, you can learn about federal criminal statutes under 18 U.S. Code. For the one specific to bankruptcy fraud, you will identify this under 18 U.S. Code § 152, which means that you were attempting to conceal your assets or other forms of cash. Under Section 152, we see a list of some of the fraudulent behaviors that someone can do to get prosecuted for bankruptcy fraud. In fact, nine distinguished behaviors were outlined under Section 152, but they all include the same basic message, which means that the individual had the intention of concealing assets.
For example, under Section 152, the individual knowingly concealed assets from a marshal, trustee, officer or custodian. This qualifies as bankruptcy fraud because any property when someone files for bankruptcy will classify as belonging to the debtor. Another thing that you have to prepare for is if you knowingly destroyed, falsified or mutilated recorded information about your financial affairs or your assets. The federal courts could prosecute this as bankruptcy fraud.

The Consequences for Bankruptcy Fraud

If someone commits bankruptcy fraud, the consequences can crush you financially and send you to prison for up to five years. After you get a bankruptcy fraud conviction, your creditors can file a lawsuit and take even more from you. This means that you can lose everything—your freedom and your finances.

Why Does Bankruptcy Exist?

We should first understand why bankruptcy exists in the first place. Bankruptcy exists because it allows a financially troubled corporation, business or an individual to start fresh. They don’t have a bunch of debts weighing them down. Under the system for American bankruptcy, they have structured it in such a way that you must declare all assets on the bankruptcy form. This allows the debtor to reclaim a portion of their money through the bankruptcy. If someone tries to manipulate this system, they can get prosecuted under federal law. The FBI and the United States Attorneys’ Office do not treat this as a victimless crime and neither should anyone else.

Acting Fraudulently with the Intent to Deceive

As long as the federal courts can prove that you acted deceitfully and with the intention of frauding your debtors, you could face up to five years in prison for the crime. To act fraudulently means that you acted with the intent of deceiving people.

History of Bankruptcy Fraud

In the past, many people were using bankruptcy as a way of scamming the system. Some of the rich and famous have used this system as a way of off-loading their debts while hanging onto their assets, such as their liquor store. This classifies as bankruptcy fraud. In fact, you have more than a couple different celebrities who have done hard time because they committed bankruptcy fraud. Some of the celebrities include:

• Randy Jackson
• Lenny Dykstra
• Rowe Messner
• Peter Pocklington

Each of these individuals were famously sentenced to a federal prison, but if you look at the common underlying thread in each of their cases, they lied about the bankruptcy and tried to conceal their assets. This led to them getting prosecuted in the federal court system. Bankruptcy works as an option for individuals who can’t pay their debts. The government intended this for honest people, but when dishonest people take advantage of the system, it makes it harder for everyone else, which is why they have made lying about bankruptcy a federal crime. Anyone who defrauds the system can expect that it will come with consequences, which is why it’s so important to be honest on the form and claim exactly what you have. If you find yourself charged with this crime, you need to get on the phone and speak with an attorney as soon as possible.

Getting a Lawyer

If you have been accused of bankruptcy fraud, you should have a solid lawyer on hand to protect you. Your rights matter, but a lawyer understands your rights clearly enough that he or she can defend them properly. Bankruptcy fraud comes with terrible financial and legal consequences. In addition to some of the other things mentioned, you could also be required to pay a $250,000 fine to the United States government. You could be facing troubled times ahead, and having a solid lawyer that you can depend on will help you ensure that your constitutional rights never fall to the wayside.