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Bankruptcy Fraud

Bankruptcy is intended as a way for individuals to get a fresh start when they’ve become overwhelmed by debt. When you file for bankruptcy, your debts are cleared — either immediately or after three to five years of a structured payment plan, depending on how you file.

In exchange for that fresh start, you’re expected to be forthcoming about all of your debts, assets, and recent payments. When you fail to disclose assets that could be used to pay your creditors or are suspected of having transferred assets to shield them from your bankruptcy filing, you may be accused of bankruptcy fraud.

Some common examples of bankruptcy fraud may include:

  • Giving, or selling for a nominal fee, an asset such as a house, car, boat, or other valuable property to a friend or family member so that it can’t be sold by your bankruptcy trustee and used to pay your creditors. For example, if you sold your car to your brother for $1 with the intent that you would be able to continue using it or reclaim ownership after your bankruptcy, that may be bankruptcy fraud.
  • Intentionally failing to disclose in your bankruptcy paperwork assets that could be used to pay your creditors, such as cash, bank accounts, stocks, vested retirement accounts, or property with equity such as a house or car.
  • Running up significant debt immediately before your bankruptcy filing when you have the intent to file bankruptcy and never intended to pay the debt
    Using false information, such as a fake Social Security number, to obtain credit or in your bankruptcy filing.

Consequences of Bankruptcy Fraud

While most people would never consider committing bankruptcy fraud, the real cases of bankruptcy fraud that do occur can cost creditors hundreds of thousands of dollars in losses. That’s why bankruptcy fraud schemes are taken so seriously by the legal system.

If your bankruptcy trustee suspects you of fraud, you may face serious consequences — including possible federal criminal charges. If you are convicted, you face large fines, up to 5 years in prison, and a permanent criminal record for a federal fraud offense, which can have numerous negative consequences on your future.

What If I Didn’t Mean to Commit Bankruptcy Fraud?

With such high stakes, it is important to fight the charges no matter what really happened. Many people assume that if they filed for bankruptcy honestly, did not intend to conceal any assets, and were not a part of a huge fraud scheme that the charges will be dropped.

Sadly, this is not the case. Even if you are completely innocent or made a small error on your bankruptcy filing, you could face bankruptcy fraud charges. A conviction can follow you for the rest of your life, impacting your career, relationships, and social standing.

Unintended bankruptcy fraud happens far more often than most people think. A majority of people accused of bankruptcy fraud are charged for concealing assets or making false statements in a bankruptcy proceeding. If you misspeak or forget to list an asset, your mistake can snowball into a fraud accusation.

How a Cleveland Bankruptcy Attorney Can Help

Luckily, such accusations can be avoided. With the help of a dedicated Cleveland bankruptcy attorney, you can ensure that your bankruptcy filings are error-free from the start.

If you are considering filing for bankruptcy in the Cleveland area, call the lawyers at Luftman, Heck, & Associates at (216) 586-6600 today to learn how we can help you.