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Bankruptcy Fraud

As more and more Americans face financial hardship, more and more Americans are filing for bankruptcy. And just as the number of bankruptcies being filed has risen in recent years, so too, has the number of bankruptcy fraud cases. Bankruptcy fraud occurs whenever a debtor seeks to deceive the court in an attempt to have their debts forgiven without liquidating all of their assets. Below are four main types of bankruptcy fraud: 

Concealing Assets
Concealing assets is a debtor’s attempt to protect assets from liquidation. Debtors try to conceal assets by understating the value of assets, not listing all assets or transferring assets to friends and family before filing bankruptcy. Since only assets that are listed in the bankruptcy petition can be liquidated, some debtors are tempted not to reveal certain assets in an attempt to receive debt forgiveness without giving up all of their possessions.

Multiple Filings
Debtors who file bankruptcy in more than one state to protect assets and avoid paying creditors are committing fraud. While it is possible to file multiple bankruptcies after a certain period of time has passed, it is illegal to file another bankruptcy when you already have a bankruptcy case pending.

Filing Incomplete Forms
When a debtor deliberately leaves questions unanswered on a bankruptcy petition, it is considered bankruptcy fraud. Leaving spaces blank when filing for bankruptcy enables unethical debtors to make false statements in an attempt to protect their assets.  This can lead to your bankruptcy case being dismissed.

Trustee Fraud
This occurs when a court-appointed trustee and debtor conspire to hide assets. The trustee decides to help a debtor deceive the court in exchange for kickbacks or bribes.

When you need to file bankruptcy, it is important to hire a reputable bankruptcy attorney to help you through the process. Remember, bankruptcy fraud is a federal crime; those who are convicted of abusing the bankruptcy process pay dearly with up to five years imprisonment and/or a fine of up to $250,000.