Bankruptcy was created to help protect consumers from the down spiral of debt. While most people who file for bankruptcy are truly in need of assistance, there are some people that have learned how to take advantage of the process. This illegal exploitation of bankruptcy is known as bankruptcy fraud and can lead to some serious consequences.
There are three ways to commit bankruptcy fraud in the United States. The first is by attempting to conceal your assets. Concealment of assets accounted for almost 70 percent of all fraudulent bankruptcy cases, according to the latest FBI statistics. This type of fraud happens when a company or individual fails to list one or multiple assets on their claim. By concealing an asset, creditors cannot fully liquidate valuables to recover the unpaid debt. Many people will try transferring money or property into a family or associates’ possession so that the asset cannot be confiscated.
Another form of bankruptcy fraud is a petition mill, which is committed by a third party. Petition mills usually target urban neighborhoods with poor populations and offer a fraudulent service to tenants facing eviction. Once the victim seeks the petition mill’s council, they are usually misled into thinking they will be avoiding eviction and lowering their debts. The petition mills will then file for bankruptcy in the name of the victim and charge outrageous fees and severely damage the victim’s credit.
Finally, filing for multiple bankruptcies is the last form of bankruptcy fraud. This can be done by filing in more than one state, either using their real name and information, false information or a combination of the two. The filer will list their same assets on multiple claims and will deliberately leave out assets. Failure to disclose your true marital status is another way to falsify information to help conceal assets or even file multiple times.
Bankruptcy fraud is considered criminal in nature. In order to prove fraud the court must prove that the defendant knowingly misrepresented material fact. The consequences of bankruptcy fraud are a sentence of up to five years in prison and a fine up to $250,000, or in some cases both. A recent statistic from the Criminal Investigation Management Information System stated that the total incarceration rate in 2010 was 61.9% and the average time spent incarcerated was 31 months. This crime is taken very seriously because it taints the reputation of bankruptcy for hard-working individuals who the system was created for.
Filing for bankruptcy is a thorough and detailed process and you should contact a Waco bankruptcy attorney to ensure that you file correctly.
Jeff Davis is the Owner of the Davis law firm, and a highly experienced Killeen and Waco bankruptcy attorney. To find out more information about a Killeen or Waco bankruptcy lawyer, please visit www.jeffdavislawfirm.com.