Committing Fraud May Be Tempting When Filing For Bankruptcy - But You Put Yourself At Legal Risk - By: David Hoyer

One of the biggest problems that the bankruptcy courts have to deal with in the U.S. is bankruptcy fraud. For a number of people in financial trouble, It is very tempting to commit. This is because, if successful, the transgressor is possibly able to illegally profit to the tune of thousands of dollars.

There are specific rules that define bankruptcy fraud. The penalties, fines and possible jail terms, vary according to the state in which they are committed.

One of the most common types of fraudulent behavior when filing for bankruptcy is simply lying. In other words, the filer is intentionally making dishonest statements before the bankruptcy court. For example, one question that you will be asked is if you have filed for bankruptcy in the last seven years. You may have filed for bankruptcy in another state or under another name and try to get away with filing for a second bankruptcy in another state thinking that you won't be found out. But, if you do so, you have committed perjury and can be prosecuted for fraud.

A second type of fraud is where a filer attempts to conceal assets or properties that he owns from the bankruptcy trustee. Naturally, no one wants to lose valuable possessions that they have acquired over the years.

Nobody likes to hear this, but when you enter a bankruptcy filing, the majority of your assets are up for grabs. This is because the trustee is empowered to sell off as much of our assets as he can to raise money with which to pay back your creditors. By hiding any of your assets, you are committing a fraudulent act upon the court.

Then there is a third common type of fraud in bankruptcy filings. This is when, prior to the actual filing, you knowingly and intentionally run up debts. And you do this with the intent of never having to pay the money back. Now, a lot of people see this as a harmless form of larceny. Mainly because it is a big company that they are cheating rather than an individual or a small business. However, the courts, don't exactly see things this way. In contrast, they, along with the the credit card companies, will push hard for prosecutions if they suspect you of doing this.

The above types of fraud are all committed by debtors. But, fraud can be committed by a creditor as well. For example, sometimes a creditor frustrated in getting the money he is owed from the bankruptcy court, will attempt to go around the court and collect money from the debtor in other ways. If he attempts this after receiving notification that the debtor has filed for bankruptcy, he has committed fraud upon the court as well.

Since the new bankruptcy law has passed, creditors more than ever before, have become much more serious about enforcing the provisions of the laws.

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