Avoiding Bankruptcy Fraud

Most people file for bankruptcy because they are overwhelmed with debt and need a fresh start. However, it is important to be completely open, honest, and careful throughout the bankruptcy process. An omission or a false statement made during the bankruptcy can amount to bankruptcy fraud, which is a crime with serious consequences. Dishonest behavior can result in dismissal of the bankruptcy with prejudice, a fine, or even imprisonment.

If you are considering filing for bankruptcy, it is important to consult with a bankruptcy attorney to ensure your filing is not in fraudulent or in bad faith. Attorney Melanie Tavare has years of experience as a bankruptcy lawyer. As a bankruptcy expert, she can help you to ensure your Chapter 7 or Chapter 13 Bankruptcy filing is complete, honest, and in good faith.

What is Bankruptcy Fraud?

Bankruptcy fraud is a federal crime that can result in a prison sentence of up to five years, a fine of up to $250,000, or both. 18 U.S.C. § 152. In 2003, the Federal Bureau of Investigation estimated that 10 percent of all bankruptcy filings involve fraud.

Fraud can be broadly defined as a false representation of a matter of fact. In general, bankruptcy fraud occurs when a fraudulent act occurs that materially relates to a bankruptcy case. A key requirement is that the action be made knowingly. Because of this, acting in good faith is sometimes a defense to bankruptcy fraud.

Some of most common examples of bankruptcy fraud are:

1. Hiding or concealing assets. The most common example of bankruptcy fraud is when individuals that are filing for bankruptcy try to hide either personal assets or business assets, for example, by not listing the assets on the schedules or forms submitted to the bankruptcy court.
2. Making false statements on the bankruptcy forms. When a debtor files for bankruptcy they are required to fill out a great deal of information on the bankruptcy forms. Leaving a part of a form blank or writing a false statement can amount to bankruptcy fraud. Because the bankruptcy forms signed and filed under oath, the debtor must be completely honest.
3. Simultaneous/multiple filings. Another instance of bankruptcy fraud is when a debtor files for bankruptcy simultaneously in different states or under different identities. Likewise, bankruptcy fraud can occur if a debtor tries to avoid limits on how frequently he or she is allowed to file.
4. Trustee fraud. The bankruptcy filer is not the only one who can be guilty of fraud. Bankruptcy trustee fraud occurs when the bankruptcy trustee deceives or attempts to deceive the court. Although the extent of trustee fraud is unknown, it often involves a bribe or a conflict of interest on the part of the trustee.

What are the Consequences of Bankruptcy Fraud?

The consequences of bankruptcy fraud can be very serious. In addition to a potential fine and imprisonment, bankruptcy fraud can be an additional roadblock to financial recovery. If a court finds a filer guilty of bankruptcy fraud, consequences could include:

• Expensive attorney’s fees and court costs;
• A fine of up to $250,000;
• A prison sentence of up to five years;
• Inability to discharge debts; and
• Dismissal of the bankruptcy with prejudice.

Contact a San Francisco County Bankruptcy Attorney Today

If you are considering filing for bankruptcy and would like to ensure that you avoid bankruptcy fraud, contact the Law Offices of Melanie Tavare for help. To speak with an experienced bankruptcy attorney, call us at 510-255-4646 or contact us online. If you wait until after your bankruptcy filing, it may be too late!