Avoiding Bankruptcy Fraud

The bankruptcy process is intended to be a tool of assistance for those suffering with financial trouble. However, there are instances in which people abuse the system, making it difficult for those seeking legitimate debt relief.


Unfortunately, there are also cases of unintentional bankruptcy abuse that result in serious consequences.

Fraudulent Actions

Bankruptcy fraud is a serious crime. Section 18 of the U.S. Bankruptcy Code states that criminal charges can be brought against a debtor if there is evidence to support a knowing and willful intent to misrepresent a material fact. For these cases, the law allows for a maximum penalty of up to five years in prison and/or fines up to $250,000. Even if a debtor commits an act of bankruptcy fraud unknowingly they could still face some steep consequences including the dismissal of their case, banishment from filing for bankruptcy for a specified period of time and/or penalty fines.

Common examples of bankruptcy fraud include:

Falsifying personal information — using personal information that is not your own, falsified, inaccurate or incomplete can all be considered fraudulent. Filing for bankruptcy in multiple jurisdictions, or listing debts and assets separately to file in another case at a later time are also considered unacceptable.

Misrepresenting financial information — failing to list all of your debts, assets, fund accounts or income earnings is also considered fraudulent. Attempts to hide or sell assets, income or other monies either before or during your bankruptcy case is also not acceptable.

Suspicious financial information — accumulating large amounts of debt in the months prior to filing for bankruptcy may also be considered suspicious, leading towards the idea that the debt burdens may have been intentional. While not all spending histories are inappropriate, there are rules as to how much debt can be accumulated within the 180 days prior to a filing in order to be acceptable and eligible in a case filing.

When you file for bankruptcy you are expected to file using only your personal information, including a full list of every debt account and asset you possess, and only file in one jurisdiction. The best line of defense to prevent any unintentional abuse of the bankruptcy system is knowledge. If you are considering filing for bankruptcy, contact a Tampa bankruptcy lawyer to review your case and guide you through the process properly.

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