In the vast majority of cases, when an individual or a married couple ends up in overwhelming debt, they arrived there due to circumstances that were beyond their control, such as a sudden job loss, a family emergency, a workplace injury, or another disability.
Fortunately, the U.S. government recognizes the fact that hard-working Americans can get into so much debt, that there seems as if there is no way out, and no end in sight. That being said, the U.S. government allows qualifying debtors to experience debt relief through bankruptcy.
While bankruptcy is an important financial solution for struggling debtors, unfortunately some people commit "bankruptcy fraud," a common white collar crime, which is prosecuted in federal court.
Federal Bankruptcy Fraud Explained
Generally, there are four basic types of federal bankruptcy fraud, including:
- The debtor hides assets from the bankruptcy court,
- The debtor intentionally and knowingly files incomplete forms with the bankruptcy court,
- The debtor files bankruptcy multiple times in different states using either real or false information, and
- The debtor bribes the court-appointed bankruptcy trustee.
It is not uncommon for a bankruptcy filer to commit one of the above types of bankruptcy fraud in conjunction with another crime, such as mortgage fraud, money laundering, identity theft, or public corruption. Often, bankruptcy fraud goes hand-in-hand with one of these white collar crimes.
According to Cornell University Law School, most cases of bankruptcy fraud involves debtors who hide assets from the court. Since creditors can only liquefy assets that are disclosed by the bankruptcy debtor, when a debtor withholds assets from the court, they are not liquidated when they are supposed to be according to federal bankruptcy procedures.
Under 18 U.S.S. § 151, bankruptcy fraud is punishable by up to five years in federal prison, or a fine not to exceed $250,000, or both.
If you are interested in filing bankruptcy, you do not want to unintentionally hide assets from the court. To ensure that you file bankruptcy in accordance with federal law, contact a bankruptcy attorney!