How Lying During Bankruptcy Can Cost You

August 26th, 2010 by Reed Allmand

How Lying During Bankruptcy Can Cost YouRobert Negrelli, filed bankruptcy on March 23, 2005 and unfortunately lied to the bankruptcy court in an attempt to defraud the system.  At the time, Negrelli was a licensed real estate broker, owned a real estate company and specialized in selling high-end homes; but claimed initially that he only earned $81,000 in the two year period prior to filing bankruptcy.  Of course, his lie was soon discovered and he finally admitted that in fact he earned significantly more during the two year period prior to filing bankruptcy. Negrelli also blackmailed some unsecured creditors during his bankruptcy, telling them that if they filed a claim he would not pay them; but if they didn’t file a claim in bankruptcy, he would pay them in full at the resolution of the case.  Negrelli has been charged with and pleaded guilty to bankruptcy fraud and now faces up to five years in prison and a $250,000 fine. 

There is a lesson in Negrelli’s bankruptcy case – you cannot successfully manipulate the bankruptcy system and in trying to do so you put yourself at risk to lose far more than you can gain.  Hiding income during bankruptcy is nearly impossible; just about any amount of money you earn can be traced, tracked down and accounted for.  Threatening your creditors and failing to list them in your bankruptcy petition is a recipe for a prison sentence.  Also, attempting to manipulate the bankruptcy system can result in a dismissal of your case, a denial of your bankruptcy discharge and a bar on future bankruptcy filings if the infraction is considered grievous enough by the bankruptcy court.


About Reed Allmand


Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."

View all posts by Reed Allmand


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