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What is fraud in bankruptcy?

Part of executing a successful bankruptcy is avoiding bankruptcy fraud. If you're already in a difficult enough position to consider bankruptcy, you may also fall prey to the temptation to try and manipulate the system for your own gain. This is not wise, and may end up placing you in a bigger mess than the one that justifies the bankruptcy in the first place.

Bankruptcy fraud can take a number of forms, including

  • Intentionally filing inaccurate forms during the bankruptcy process
  • Hiding assets to avoid losing them in the bankruptcy
  • Filing for bankruptcy in multiple jurisdictions simultaneously
  • Bribing a trustee for special treatment

These are fairly serious crimes and can lead to hefty fines or even jail time. For instance, filing intentionally inaccurate forms may bring about perjury charges.

Incredibly, many people who enter into bankruptcy don't actually understand all of the benefits available to them because they choose to navigate the process by themselves. While it is understandable why a person may choose to do this, it is still rarely a wise choice.

Many individuals worry, for instance, that enlisting an attorney to help guide them through a bankruptcy will cost them too much. In fact, the opposite is often true — professional legal counsel can often help a person identify many more ways to save and protect assets throughout bankruptcy than they might find on their own.

If you are considering a bankruptcy, be sure that you have all the guidance you need to make the most of the process. If you choose to attempt it alone, you may not only miss out on benefits or exemptions you can claim, you may also find it more tempting to try and get away with some form of fraud. It is probably unwise to wander into a bankruptcy unprepared when an experienced attorney is available to protect your rights and guide you through the process.

Source: Cornell Law School, "Bankruptcy fraud," accessed Oct. 06, 2017

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