Bankruptcy is an important financial tool for those who need relief from overwhelming debt. However, the process can be both highly stressful and legally complex.
It can be easy to feel panicked when facing the possibility of losing valuable assets. Those preparing for bankruptcy should know that the court will scrutinize their financial activity before and during the process very carefully. Suspicious behavior or dishonest information on forms may result in charges of fraud and perjury.
Provide complete and accurate information
When individuals file for bankruptcy, they must disclose all aspects of their past and present financial circumstances under penalty of perjury. Bankruptcy trustees are adept at discovering potential inaccuracies or concealment, including undisclosed or undervalued assets.
Avoid taking on new debt
The court may suspect fraudulent intent if an individual takes on a significant amount of new debt in the months leading up to bankruptcy. To avoid this, filers should make sure to be careful about the size and types of purchases they make on credit.
Be careful about moving assets
Individuals sometimes try to protect assets by moving them. Hiding funds in cash, transferring property titles to family members, making large gifts or selling property at significantly less than market value are all examples of pre-bankruptcy actions that could lead to a fraud investigation.
Bankruptcy fraud is a serious charge that can lead to both a substantial fine and years in prison. However, receiving a conviction may depend on whether the individual intended to deceive the court or simply made a filing mistake.