Bankruptcy fraud is a crime. Common
fraudulent or abusive acts under bankruptcy statutes
include concealment of assets, concealment of
documents, destruction of documents, false
statements, conflicts of interest, fraudulent
claims, and redistribution of assets arrangements.
Nearly two thirds of bankruptcy fraud involves the
intentional non-disclosure of assets and cash in a
bankruptcy petition. Schemes also include the hiding
of assets, making of false statements, making multiple
filings, undervaluing assets, forging petitions, use
of petition mills that provide false information and
making gifts or transferring assets immediately prior
to or during bankruptcy. The penalties can be severe.
Bankruptcy fraud is a felony punishable by up to 5
years in prison and a $250,000 fine. Conviction for
bankruptcy fraud can also invalidate your bankruptcy
and allow your creditors to collect debts that were
discharged by the bankruptcy.
Bankruptcy fraud has been used by individuals
involved in all sorts of businesses. It's a favorite
ploy of organized criminals and other con men.
Consulting with legal counsel can provide information
about legal rights, alternatives to bankruptcy and
procedures that could keep many from crossing the line
to criminal behavior.