Struggling with debt can be frustrating and overwhelming, to say the least. Couple that with a federal or state investigator interrogating you and your family in regards to a potential fraud issue, a whole new problem begins to surface. Bankruptcy fraud is a prevalent issue in the world today, with the increasing number of people turning to bankruptcy as a method of debt relief. However, there are strict rules revolving around bankruptcy and all related issues which can result in criminal consequences for an innocent individual. According to the federal bankruptcy law, or Title 11 of the United States Code (11 U.S.C. §§ 101-1330), bankruptcy is the legal process that gives a consumer or business a fair opportunity to resolve any unwanted debt.
There are two types of consumer bankruptcy that are commonly utilized by debtors throughout the United States: Chapter 7 and Chapter 13. Briefly, Chapter 7 bankruptcy is known as the "liquidation" form of bankruptcy and allows a debtor to quickly sell their nonexempt property and distribute the proceeds to their creditors. Chapter 13 is the section in the Bankruptcy Code that allows a debtor with regular income to restructure their debt into payments that are more affordable. Both of these chapters in the code give debtors across the United States the opportunity to start clean and achieve the debt free future that they desire.
While the bankruptcy process is clearly defined according to federal law and is made as simple as possible for debtors in the nation, there are dangerous aspects to filing that could potentially have lifelong repercussions for a family. When a person files for bankruptcy, they are expected to provide the court with a detailed outline of all sources of income, assets, bank accounts, and debts owed to creditors. Hiding just one of these from the court, even unintentionally, can be construed as bankruptcy fraud.
What is bankruptcy fraud? This is a serious criminal offense that affects many people each year, including those who unintentionally or unknowingly committed this crime. Unfortunately, without a skilled bankruptcy lawyer, you may face criminal consequences, including imprisonment, fines, and a federal criminal record. According to the Internal Revenue Service, there were 25 investigations for bankruptcy fraud in the fiscal year 2011. Of these investigations, 23 resulted in criminal consequences, including federal prison sentences, home detention, or other methods as determined by the prosecution on the case.
When a person is accused, investigated and convicted of bankruptcy fraud, the criminal consequences do not stop with incarceration. Taking a case to court can be expensive in itself, and a defendant may face even further financial devastation due to court fees, loss of income, and additional accumulation of their debt due to the inability to file for bankruptcy. There is a way to protect yourself if you are filing for bankruptcy and are worried about facing potentially lifelong criminal consequences, though. Obtaining the resources of a local bankruptcy attorney can help you find all of your assets and file all of the correct documents to prevent a federal investigation from taking place regarding your bankruptcy case.
In many cases involving potential fraud, a person is charged with this offense due to a miscommunication or a misunderstanding in regards to an unknown asset in their name. For example, you have a trust fund from your grandmother that was created when you were an infant, which goes into effect when you turn the age of 18; it was an asset that you never knew about. During bankruptcy, the court will find this asset and may suspect that you were keeping it hidden for any particular reason. They will immediately request an investigation to be conducted by the IRS and you may find yourself facing criminal charges soon thereafter.
Before filing for bankruptcy, you are strongly advised to speak with a bankruptcy attorney at a local law firm. Having an attorney on your case who has the legal experience and knowhow in bankruptcy matters will be pivotal in your case, especially when you are serious about reducing or ridding of your overwhelming debt. Your bankruptcy lawyer will be able to inform you on your rights and help you unveil any hidden assets you may be unaware of – which can even help you pay for some of your accumulating debt. To learn more about bankruptcy fraud and how you can protect yourself and your future, contact your local bankruptcy lawyer today!