If you are having financial difficulty, you may be considering bankruptcy. An important part of the process is disclosing all of your assets and property you own. If you do not knowingly provide accurate information regarding your assets, you can get in trouble and be found guilty of bankruptcy fraud. Here is what you need to know.
What Is Bankruptcy Fraud?
If you accidentally forget to disclose an asset during your bankruptcy filing, you can always disclose it as soon as you realize you have done so. This is not considered fraud. Fraud occurs when you are trying to purposely hide some of your assets with the hope to keep those assets instead of possibly losing them to bankruptcy.
There are multiple ways to commit bankruptcy fraud. Transferring property to another person to avoid discharging it is considered fraud. If you falsify your bankruptcy documents, withhold information about your assets, or make any false statements during your bankruptcy, you can also be guilty of bankruptcy fraud.
What Happens If You Commit Bankruptcy Fraud?
If you are found guilty of bankruptcy fraud, you can be charged civilly. In major cases, you may face federal charges and even face a criminal penalty.
Civil penalties can include the forfeiture of your right to discharge your debts. This means your creditors can move on with suing you for not paying your debt. You could also lose your home. Any debt you have will continue to collect from you. Forfeiture of your right to discharge your debts essentially prevents you from filing bankruptcy and you have to deal with your debt without that protection.
During a bankruptcy, you can often take some exemptions to retain some of your assets once your bankruptcy has concluded. If you are found guilty of bankruptcy fraud, you can lose the ability to take these exemptions and potentially lose those assets to your creditors if you cannot pay for them.
If your act of bankruptcy fraud is really egregious and goes before a federal court, you may receive some criminal penalties. You can go to jail for several years, receive probation, and face a large fine.
Bankruptcy is a complex process that has a lot of moving parts. It is also a very thorough process, and all your assets will be uncovered eventually. Do not try to fool the trustee by trying to hide any information from your trustee, as it is their job to find everything even if you do not disclose it. Working with an experienced bankruptcy attorney will ensure you do not make any mistakes or accidentally leave any information out of your bankruptcy filing.
For more information, contact a law firm near you.