Issues with bankruptcy fraud

On Behalf of | Apr 12, 2022 | blog, Fraud

Federal bankruptcy courts provide a way for debtors to seek relief from a seemingly impossible financial situation. Filers in a New York court should expect to present documents and evidence detailing all liabilities and assets. As with all state and court proceedings, presenting false evidence and testimony could have significant consequences. Sometimes, a person may not intend to commit bankruptcy fraud, but even honest mistakes might lead to trouble.

Concerns surrounding bankruptcy fraud

Bankruptcy proceedings often involve asset liquidation to pay creditors. A debtor might not wish to sell specific items, such as jewelry, kept in storage, so the person conceals the assets. Doing so could lead to criminal charges and possible jail time. Instances of people selling furniture and other valuables for cash and not reporting the transactions to the court cause the debtors more trouble than expected.

Outright lying to the court seems highly unwise given the potential consequences. Yet, some may make deliberate false statements to the court, opening doors for perjury-related charges. Others might make errors, omissions, and mistakes due to negligence. The court might not smile kindly on them, either.

Worries about fraud charges

Negligence is not the same as fraud, and someone charged with bankruptcy fraud charges may need to prove they erred. Anyone who realizes they made a mistake or accidentally concealed something may need to correct the situation swiftly. Otherwise, the problem could become far more complicated.

Certain behaviors will look highly suspicious, such as filing several bankruptcy proceedings in different states or taking out credit in a newly established business’s name. Anyone who attempts to game the bankruptcy courts could fail miserably and suffer legal consequences.