Bankruptcy Fraud

Bankruptcy Fraud is a broad category involving crimes that exploit the bankruptcy process. The bankruptcy system is grounded on the assumption that a debtor will make full disclosure of their liabilities and assets, so regulations and laws are put in place to protect the bankruptcy system and creditors. Bankruptcy Fraud is governed by federal laws and is handled by the federal government. It can be enforced both criminally and civilly. In one Bankruptcy Fraud scenario, a debtor may hide some property and fail to disclose his or her ownership of it in their bankruptcy petition. Since creditors can only use assets a debtor discloses, failing to disclose the property allows a debtor to keep the asset from the creditors it should be going to. In other cases, a debtor may file bankruptcy petitions in multiple states, or file under multiple false or stolen identities. In other scenarios, debtors bribe or attempt to bribe creditors not to file claims against the debtor. However, it’s not just the debtor that can be liable in a Bankruptcy Fraud case. Third parties who knowingly receive property from a debtor who has filed a bankruptcy petition can also be charged. Some Bankruptcy schemes involve “consultants” that claim they will stop an eviction or foreclosure on behalf of a debtor, but instead they file a bankruptcy petition on behalf of the debtor without telling the debtor, pocketing the fees and ruining the debtor’s credit.