The Dangers of Bankruptcy Fraud

Bankruptcy fraud is a broad crime defined by federal laws to protect debtors and creditors alike to ensure that bankruptcy is as fair as possible to both parties. Four major types of bankruptcy fraud are as follows:

• Concealing Assets. This is easily the most common form of bankruptcy fraud. Debtors must report all income and property to a court-appointed trustee, who sells off property to pay creditors. Failing to report assets, transferring, or otherwise hiding property constitutes fraud.
• Providing False Statements. Those filing for bankruptcy must fill out the necessary paperwork, and must be entirely honest throughout the process. Leaving out information or inputting incorrect information can lead to bankruptcy fraud charges.
• Filing Multiple Claims. Some people attempt to file for bankruptcy on multiple occasions in the same state with the use of fake identification. Others apply for bankruptcy in multiple states. Filing multiple bankruptcies is fraud.
• Trustee Fraud. Instances of the trustee attempting to deceive the court, working either with or at the expense of the filer, may result in serious penalties.