Continuing from A Look at Bankruptcy Fraud in the U.S. (Part 1)¸ below we will continue our discussion regarding how bankruptcy fraud may take place (and what you can do to avoid being accused of this serious crime).
Types of Bankruptcy Fraud (Continued)…
Running up credit card debt prior to bankruptcy or providing false info on bankruptcy petitions are common forms of bankruptcy fraud in the U.S.
In addition to concealing one’s assets and filing multiple bankruptcy petitions at the same time, other forms of bankruptcy fraud can include:
- Running up credit card charges immediately before filing for bankruptcy – Although filing for bankruptcy can be an effective way to get substantial debt (like credit card debt) discharged, people cannot legally go out and run up their credit card charges when they know they will be filing for bankruptcy in the near future. Similarly, it will be considered to be an act of bankruptcy fraud if a person opens up a new credit card, maxes out (or charges a lot to) this credit card and then, immediately after, files for bankruptcy.When creditors and/or bankruptcy trustees suspect that a person has committed this type of bankruptcy fraud, a person’s bankruptcy petition can be rejected by the courts, and that individual can still be held liable for repaying creditors for the charges.
- Providing any wrong or incomplete info on bankruptcy petitions – When filing for bankruptcy, borrowers are legally required to provide accurate, truthful and complete information about themselves and their financial situation. In fact, people filing for bankruptcy will be required to sign a legally binding agreement stating that all of the information they have provided in their bankruptcy paperwork is complete and truthful.This means that, if people make mistakes in their paperwork (whether this mistake pertains to their personal info or their financial situation), it may NOT be a valid defense that this was simply an accident or oversight – as the court expects people to check their bankruptcy petitions and clear up any errors prior to filing these documents. As a result, people may be subject to prosecution for bankruptcy fraud if or when they do not provide complete or correct info about themselves.
Don’t miss the upcoming conclusion to this blog for a look at the potential penalties for bankruptcy fraud (when people are ultimately convicted of this crime)…
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