Bankruptcy laws require that the filer be honest and open about his or her financial situation, including disclosing all assets and debts. While no one wants to lose property to pay off creditors, some assets must be sold during the bankruptcy case to pay off the filer’s debts. If a filer actively tries to hide or fails to disclose information in hopes of keeping it from the bankruptcy court, this is called bankruptcy fraud and it can cause your case to be dismissed.
Concealing assets is one of the more common forms of bankruptcy fraud. Approximately 70 percent of all cases where some type of fraud was reported involved concealment of assets. It can involve the person simply leaving a certain asset off the list of those reported to the bankruptcy trustee. It can also involve hiding the asset through a fraudulent transfer, including giving the asset to someone else to keep it during the duration of the bankruptcy case, with the intent that the person holding the asset will return it after the case concludes. If this type of fraud is discovered, the filer and the person holding the asset could be held liable for bankruptcy fraud.
False Information Provided to the Court
At the start of the bankruptcy case, the filer will need to disclose important financial information to the court. Making a knowingly false statement in these documents is considered fraud, but it can also be fraud if someone purposefully leaves unanswered questions in the bankruptcy petition.
Bankruptcy Petition Mills
Another growing trend in bankruptcy fraud has to do with petition mills, which are essentially scams run by businesses offering to keep someone in his or her home for a fee and offering to pay the homeowner’s mortgage if he or she pays the company directly. At this point, the company then opens a bankruptcy filing in the individual’s name, many times without that person even knowing. The bankruptcy petition is then used to stop an eviction or foreclosure, but if it is not done truthfully and with the consent of the petitioner, it can be seen as fraudulent, resulting in the bankruptcy case being thrown out and the eviction or foreclosure proceeding.
Multiple Bankruptcy Petitions in Different States
Many fraudulent schemes reported in the past have involved filers who used real or fake names and a combination of true and false information to file multiple bankruptcy petitions in several different states. The concept behind these multiple filings is the individual can conceal different assets by taking advantage of various state bankruptcy exemption allowances. However, getting caught can result in these petitions being dismissed, as well as the person being prevented from filing again in the future.
Keep in mind that these actions described above are knowing and deliberate, thus constituting fraud. However, if the filer genuinely made a mistake or forgot to list an item, through no ill intent on his or her part, this should be explained as soon as possible to the bankruptcy trustee. Genuine mistakes that are immediately disclosed will not result in the case being dismissed.
If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.