What is Bankruptcy Fraud?


Bankruptcy law is extremely complicated, and it is important to work with an Oak Park bankruptcy lawyer no matter how straightforward you think your case may be. Indeed, failing to work with an experienced advocate could result in significant difficulties in your case. In particular, omitting certain information can look like bankruptcy fraud. If you are considering Chapter 7 bankruptcy or Chapter 13 bankruptcy, it is important to learn more about bankruptcy fraud and how the failure to provide details about assets may result in bankruptcy fraud allegations.
 
Understanding Bankruptcy Fraud
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was designed, in part, to reduce the rate of bankruptcy fraud in consumer bankruptcy cases. One of the ways in which the law is supposed to prevent bankruptcy fraud is through the use of the “means test” to determine whether an individual is eligible to file for Chapter 7 bankruptcy. What does bankruptcy fraud actually look like in practice?
According to the Cornell Legal Information Institute (LII), bankruptcy fraud generally falls into one of four different categories:
  • Debtor fails to list assets in order to prevent them from being liquidated;
  • Debtor intentionally files false or incomplete bankruptcy forms;
  • Debtor files for bankruptcy multiple times, unlawfully, by filling out false forms or attempting to file for bankruptcy in multiple jurisdictions; and/or
  • Debtor attempts to bribe a court-appointed bankruptcy trustee.
Hiding or Concealing Assets in a Bankruptcy Petition
In an overwhelming majority of bankruptcy fraud cases (about 70%), the fraud involves a debtor attempting to hide or conceal assets. Since assets that have been properly listed by the debtor are the only things that can be liquidated in order to repay creditors in a Chapter 7 bankruptcy case, debtors sometimes try to avoid listing assets that are not exempt or might hastily transfer property to another party before making a list of assets for bankruptcy purposes.
For example, let us say that a debtor in Oak Park plans to file for Chapter 7 bankruptcy but realizes his art collection—or at least most of it—will not be exempt. As such, he is required to list it as an asset that can be liquidated in order to have a bankruptcy discharge. However, the debtor does not want to lose the art pieces he has spent years collecting. In one scenario, he may decide simply to avoid listing the pieces as assets, hoping that they will not be discovered. In another scenario, he may transfer ownership of the paintings to a sibling in order to avoid having the collection liquidated. In either scenario, because the debtor hides or conceals the assets with the intent to do so, he may end up facing bankruptcy fraud charges.
What happens if a debtor honestly forgets to list an asset? Under the Bankruptcy Code, bankruptcy fraud only exists if a debtor knowingly misrepresents a material fact in the case. In other words, the debtor has to have the intent to hide or conceal the asset(s), and must do so knowingly.
Contact an Oak Park Bankruptcy Lawyer
If you have questions about properly listing assets as you prepare your bankruptcy petition, you should speak with an Oak Park bankruptcy lawyer. Contact the Emerson Law Firm for more information.
See Related Blog Posts:

Comments

Post a Comment

Popular posts from this blog

New Information on Debts That Bankruptcy Cannot Discharge

If you are thinking about filing for bankruptcy in the Oak Park area, it is important to know that certain kinds of debts cannot be discharged in a bankruptcy case. Under U.S. bankruptcy law, these are known as non-dischargeable debts, or exceptions to discharge. There are certain types of debts that have long been identified clearly as non-dischargeable debts, while there are misconceptions about other types of debts that may or may not be dischargeable. As an article in CNBC discusses, the U.S. Supreme Court recently issued a ruling in the case of Bartenwerfer v. Buckley , which clarifies that debts incurred due to another party’s fraud cannot be discharged in an individual’s bankruptcy case. Our Oak Park bankruptcy attorneys can explain the Court’s recent ruling and provide you with additional information on dischargeable and non-dischargeable debts. Supreme Court Says Debt Incurred Due to Another’s Fraud is Non-Dischargeable The recent Bartenwerfer case involved a debtor attempti
Read more

Learning About Different Types of Wills

Whether you are young or old, single or married, wealthy or with limited financial means, healthy or dealing with a medical condition, it is important to make a will. Many people have incorrectly heard that wills are only necessary for particular people, such as those with a substantial amount of assets or for older adults in poor health. Yet wills are critical for adults of all ages, and an experienced Oak Park estate planning lawyer can help you to make one. Before you begin working with a lawyer on a will, you might start conducting your own research into wills in Illinois and the requirements for a valid will. In so doing, you are likely to come across information about many different types of wills, and you are probably going to wonder whether you will need more than one kind of will. In short, there are different terms that can be used to describe the form or function of a will, as well as some distinct types of wills. Our Oak Park estate planning attorneys can explain in more
Read more

Younger Parents Need an Estate Plan

It is critical for younger parents to have an estate plan, even if they know they are healthy and do not anticipate that anything will happen in the near future. Much too often, younger parents assume that they can wait until they are older to consider estate planning or until there is a health-related reason to begin the estate planning process. Yet estate planning is critically important for parents who have minor children. While estate planning is important for adults of all ages, it can allow parents to make important decisions about who will care for their children in the event that they become unable to do so themselves. Our Oak Park estate planning lawyers can explain in more detail. Naming a Guardian for Your Minor Children in Your Will Most importantly for younger parents, making a will allows you to name a guardian who can care for your child in the event of your unexpected death. Nobody anticipates a deadly accident or a sudden situation in which there is a need for another
Read more