Bankruptcy fraud is a serious crime that carries heavy punishment. Bankruptcy fraud carries a sentence of up to five years in prison, or a fine of up to $250,000, or both.
Failing to conceal assets is the most common form of bankruptcy fraud and accounts for over 70% of bankruptcy fraud. Filing for bankruptcy requires a full disclosure of assets. If your bankruptcy trustee discovers that you have concealed assets with the intent to hinder, delay or defraud creditors, your bankruptcy will be denied. Along with the potential of criminal charges.
If the trustee finds the hidden assets after you receive your debts have been discharged your discharged debts can be revoked. This can happen at any time; before the bankruptcy case is closed, after the case is closed, or up to one year after the date your debts were discharged.
Below is a list of common ways that debtors knowingly or unknowingly hide their debts.
If you did not report an asset by mistake you should immediately file papers to correct your mistake and disclose the asset to the courts. Do not be afraid to disclose the asset after a mistake was made, the court will not deny/revoke your discharge if it is shown that your failure to disclose the asset was not done to hinder, delay or defraud creditors. By reporting the asset and taking action to fix it before it was potentially discovered by the bankruptcy trustee shows that there was no intent to hinder, delay, or defraud.
The trustee in bankruptcy is an entity who is in charge of administering a bankruptcy estate. They are appointed by the United States Department of Justice or the creditors involved in the bankruptcy case. In chapter 7 bankruptcy, the trustee is responsible for gathering the debtor’s non-exempt property, managing the funds from the sale of assets, then paying expenses and distributing the balance to the creditors whom are owed.
In chapter 13 bankruptcy, the trustee is responsible for receiving the debtors monthly payments and distributing the monthly payments to creditors. The bankruptcy trustee will act on behalf of the debtor to guarantee that both the creditors and the debtors interests are upheld in accordance with US bankruptcy laws, and often act as a negotiator between the creditors and debtor.
Bribing a court-appointed trustee is like robbing a gun store at gunpoint, you’re asking for trouble. If you try to bribe a court-appointed trustee you will get in trouble and the courts will take action.
For exact legal definitions, the penalties and definitions of bankruptcy fraud are defined and laid out under the US Code of Law in Title 18, Part I, Chapter 9, Section 152 (18 U.S. Code § 152).
An attorney will go over the rules and regulations when filing for bankruptcy to ensure you understand what to do and what not to do when filing for bankruptcy. You can free bankruptcy consultation from Fairmax Law by filling out our online form, or by calling us at 888-FAIRMAX (324-7629).
This article is not meant as legal advice, and Bankruptcy is very complicated depending on every persons overall financial situation. So, if you are considering any chapter of the bankruptcy code, is it called one of our attorneys for a free, same day consultation.
To learn more about Chapter 7 or Chapter 13 Bankruptcy, the federal government has excellent information about it on their website at http://www.uscourts.gov/services-forms/bankruptcy
Fairmax Law™ is a Service of Jaafar Law Group PLLC and is a designated debt relief agency that helps clients file bankruptcy under the federal bankruptcy code.