How To Avoid The Accusation Of Bankruptcy Fraud

Starting a business is always a risk, and sometimes it doesn't end well. Read on to find out if bankruptcy is the right move for you.

How To Avoid The Accusation Of Bankruptcy Fraud

How To Avoid The Accusation Of Bankruptcy Fraud

30 November 2018
, Blog

Obtaining the financial relief that a chapter 7 bankruptcy can bring is far too important to allow it to be affected by the shadow of fraudulent activity. Regardless of a filer's intentions, bankruptcy fraud is a serious federal offense. Read on to learn more about how your moves before and during a bankruptcy can be interpreted as fraud and how to avoid even the suspicion of fraudulent activities with your bankruptcy.

Common Bankruptcy Acts of Fraud

Most bankruptcy fraud situations involve:

  1. Failure to disclose income, winnings, property, etc
  2. Transferring or selling assets improperly

To explore incidents of bankruptcy fraud more in detail, read more about some common bankruptcy fraud categories.

  • Giving False Information – When you fill out your bankruptcy paperwork you are under oath to state your income, assets, debts, and more honestly and completely. For example, you must list that boat that you keep at the dry-dock facility even if you never use it anymore.
  • Using Credit Before Filing You are allowed to use your credit cards prior to your filing date, but there are rules about the amount you can charge and about cash advances. If you charge up your cards before you file thinking that you are getting something for nothing, you may run afoul of the trustee and your creditors.
  • Selling, gifting, or hiding property – You must list all of your assets and there are strict rules about selling off or concealing assets to avoid having to forfeit them. For example, you might make a large withdrawal from your savings account and place the funds in an undisclosed bank safe deposit box. This is concealment.

Avoiding Bankruptcy Fraud

Follow these tips to stay on the right side of the bankruptcy law and the trustee:

1. You and only you are responsible for an accurate listing of your assets so be thorough and honest.

2. When in doubt, disclose it.

3. If you have sold or given away property prior to your filing, let your bankruptcy attorney know about. The property can be seized, but that's better than having your bankruptcy thrown out and being charged with bankruptcy fraud.

3. Check your bankruptcy paperwork over carefully before you sign it.

4. Speak to your attorney if you have used your credit card in the months before you filed. If you used them for necessary expenses, then the use might be allowed.

Contact a bankruptcy law firm to find out more about avoiding the suspicion of fraud in your case.

About Me
is bankruptcy a smart business move?

America is supposed to be the land of opportunity. What do you do when you try to take advantage of an opportunity that ends up costing you more than what it is bringing in? Sometimes, a business that you start just doesn't work out as you had hoped. It could be that you don't have enough experience or it could be that the market goes bad. Whatever the reason for the business not doing well, you will have to think carefully about your next step. Is bankruptcy the only way to get through this difficult time without losing everything you have worked for?