If you’re getting ready to file for bankruptcy, you can save yourself from sabotaging your case by being honest. Bankruptcy fraud is a serious federal offense with over 100,000 people committing the crime each year. According to the Internal Revenue Service (IRS), this translates to nearly 10 percent of bankruptcy filings done annually, having some form of fraud associated with it. Being truthful about your situation can save time and money.
To understand further on how to avoid bankruptcy fraud, learn what it is and different types. Because federal laws are very specific in nature (to protect both debtors and creditors) in regards to how bankruptcy is utilized, being educated about fraud will help you avoid making illegal moves.
Presenting false information, hiding property and filing bankruptcy multiple times are common forms of bankruptcy fraud. A five year prison sentence and a $250,000 may result if fraud is committed.
Things that help you avoid losing property:
- Be honest about your property – Report all personal assets to your trustee or attorney. Most fraud cases are connected to hiding property. Failing to report all income or even transferring property to a family member or friend is also fraud. There are exemptions available you may qualify for to help protect your assets.
- Be honest when giving information – Avoid giving false statements when you submit documentation to be forwarded to the court, answers you provide should be true statements. In some cases, leaving questions unanswered may even be considered fraud.
- Be honest if you have filed bankruptcy before – Know the limits regarding how many times you can legally file for protection. Bankruptcy allows individuals to seek protection again after a certain amount of time has passed. Yet, there are debtors who use false Social Security numbers, names and other information to file in the same state multiple times.