Attorney at Debt Advisors Law Offices
Practice Areas: Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, Stop Foreclosure
Bankruptcy gives people a legal way to deal with debt they can no longer manage. In return, the court expects a full and honest picture of what you own, owe, earn, and spend.
A mistake on a form is not automatically fraud. The bigger problem is when someone knowingly hides property, lies about money, or gives false information to the court. If you are unsure what to list, a Wisconsin bankruptcy lawyer can help you get the paperwork right before it is filed.
Bankruptcy fraud happens when someone deliberately lies, hides information, or uses a bankruptcy case to deceive the court or creditors.
This can include hiding property, giving false answers under oath, hiding financial records, filing a false claim, or offering a bribe in a bankruptcy case. These acts are covered by 18 U.S.C. § 152.
Federal law also covers schemes that use a bankruptcy filing or document to defraud another person. 18 U.S.C. § 157 addresses these.
The key issue is whether the person acted knowingly and with the intent to deceive. A mistake, such as accidentally leaving an old account off a form, is different from deliberately hiding the account from the trustee.
Most people filing bankruptcy are trying to follow the rules. Still, some actions can create serious problems when they are done on purpose.
Common examples include:
The basic rule behind honest bankruptcy disclosure is simple: list what you own and answer the questions truthfully.
Bankruptcy fraud requires more than a simple mistake. Federal fraud laws focus on conduct that is done knowingly and fraudulently.
Not by itself. Bankruptcy paperwork asks for a lot of information. People can forget an old account, misunderstand a question, or make a mistake when listing an item’s value. An honest error may often be corrected by updating the bankruptcy schedules.
Problems become more serious when a person knows information is false and leaves it that way, or takes steps to hide the truth. For example, finding an omitted account and promptly correcting the filing is very different from moving money after someone starts asking about it.
If you notice an error after filing, deal with it promptly instead of hoping no one sees it.
Using a credit card before filing is not automatically bankruptcy fraud.
However, debts caused by actual fraud can be treated differently from normal debts. Under 11 U.S.C. § 523, some debts obtained through false pretenses, false statements, or actual fraud may not be discharged. The law also contains special rules for certain recent luxury purchases and cash advances.
This is different from criminal bankruptcy fraud. A person should not assume that every large purchase before filing is a federal crime.
Bankruptcy fraud can have serious consequences. The exact penalty depends on what happened and which law applies.
Under 18 U.S.C. § 152, certain acts of bankruptcy fraud can lead to a fine, up to five years in prison, or both. Fraud schemes involving a bankruptcy case can also carry up to five years in prison under 18 U.S.C. § 157.
There can also be consequences in the bankruptcy case itself. Under 11 U.S.C. § 727, a court can deny a Chapter 7 discharge when a person intentionally hides property or knowingly makes a false statement under oath. In some cases, a discharge that has already been granted can also be revoked.
If a discharge is denied or revoked, debts that might otherwise have been cleared in bankruptcy can remain.
Be honest and complete when you fill out your bankruptcy forms. If you are unsure whether something needs to be listed, tell your lawyer instead of leaving it out.
Before filing, gather records for:
Do not hide property because you are worried about losing it. Bankruptcy exemptions may protect it. Tell your lawyer about anything you sold, gave away, or transferred before filing. Even if you think it does not matter, your lawyer should review it first.
The U.S. Trustee Program, part of the Department of Justice, works to protect the bankruptcy system from fraud and abuse. It can review cases and refer suspected crimes to federal law enforcement and prosecutors. Recent U.S. Trustee cases have involved undisclosed accounts, hidden income, false statements, and property transfers.
Suspected fraud can also be reported through the U.S. Trustee Program’s bankruptcy fraud process. The program asks for details about the case, the conduct being reported, and any documents that support the report.
An honest mistake is not the same as knowingly committing fraud. If you find an error or missing information, correct it as soon as possible rather than leaving information you now know is wrong.
Tell Debt Advisors Law Offices promptly. Depending on where the case stands, bankruptcy forms may be amended to correct missing or inaccurate information.
Yes. In Chapter 7, intentionally hiding property to hinder, delay, or defraud creditors can be grounds for denying a discharge under federal bankruptcy law.
Yes. Federal laws cover several types of bankruptcy fraud, including hiding estate property, making fraudulent statements, false claims, bribery, and using bankruptcy as part of a fraud scheme.
Yes. You can report suspected bankruptcy fraud to the U.S. Trustee Program. The program asks for specific facts and supporting information when possible.
Bankruptcy forms ask for a lot of information, and leaving something out can cause problems later. Be open about your property, income, debts, accounts, and recent financial activity.
If you are unsure about an asset, transfer, or other part of your finances, ask before filing. Do not move or hide property on your own.
Contact Debt Advisors Law Offices for a free consultation to discuss your situation and get help preparing your bankruptcy case accurately.
Learn about bankruptcy protections, types of bankruptcy, how to get started, what to expect, and who to trust. Filing bankruptcy is the ONLY way to completely eliminate debt. If bankruptcy is right for you, it offers powerful protections that cannot be achieved through alternative solutions such as hardship relief, loans, or debt settlement.
