Bankruptcy fraud carries serious penalties

On Behalf of | Jan 3, 2023 | Firm News

Bankruptcy provides a financial lifeline to those struggling with overwhelming debt. When filing for bankruptcy, a person should understand the serious consequences of any fraudulent acts committed as part of the bankruptcy.

Bankruptcy fraud

Bankruptcy fraud is the awareness and fraudulent misrepresentation of a material fact during a bankruptcy proceeding. Common examples of bankruptcy fraud include concealing assets or providing false information on a bankruptcy form.

Concealing assets is by far the most common type of bankruptcy fraud. A person may deliberately fail to disclose an asset on bankruptcy forms. Or a person may sell the asset for cash or transfer it to a relative without reporting the transaction.

Regardless of how a person conceals the asset, the intentional and fraudulent concealment of assets is a serious crime, as is any other type of fraud committed in bankruptcy.

Bankruptcy fraud and other crimes

 In many cases, a person committing bankruptcy fraud may also be committing another criminal offense. A person making a false statement on a bankruptcy form, for example, may be guilty of both bankruptcy fraud and perjury for making a false sworn statement. This can compound the potential criminal liability associated with bankruptcy fraud.

What to do if accused of bankruptcy fraud

Despite a person’s best efforts, mistakes happen when completing bankruptcy forms or people neglect to list all assets. A person may also experience a temporary lapse of judgment, leading the person to conceal assets or omit information in an effort to keep assets that otherwise may go to creditors.

Whatever the circumstance, a person facing accusations of bankruptcy fraud should consult an experienced attorney. Every person deserves a defense and simple mistakes or negligent omissions of information are not bankruptcy fraud.

Ultimately, to convict a person of bankruptcy fraud, the government must prove beyond a reasonable doubt that the person made intentional and fraudulent misrepresentations.