Bankruptcy protection has proven helpful for millions of Americans who have struggled under debt. Filing for bankruptcy can make it much easier to get back on your feet by allowing for restructuring and removal of debt. Despite the benefits it has offered to people in need, the bankruptcy system has also been illegally exploited for personal gain. This is known as bankruptcy fraud.
Bankruptcy fraud most commonly involves concealment of assets. In other words, during the filing process, the debtor declines to mention certain assets (money etc) that would be eligible for liquidation under bankruptcy procedures. Since the first goal of bankruptcy is to repay debts to the greatest extent possible, refusing to disclose money or property that could repay these debts is dishonest and illegal.
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Ordinarily bankruptcy fraud charges are accompanied by other legal charges as well. In cases of concealed assets, for example, charges like money laundering might follow. This is not so much because of the concealed assets per se, but rather a result of the tendency for people who receive money illegally to launder it and fail to report it on tax and bankruptcy forms. Sometimes people in this situation also file in multiple states, again in an attempt at hiding assets.
Sometimes bankruptcy fraud charges might accompany identity theft charges, as in one of the other common forms of bankruptcy fraud. There are "services," commonly known as bankruptcy petition mills, that promise citizens the possibility of debt relief of some sort. These companies then gather the person's personal information and start prolonged bankruptcy procedures in that person's name. Usually this also involves charging them huge fees. The sum effect is to ruin the person's finances, draining their bank account and destroying their credit score.
If you suspect a person or organization might be guilty of bankruptcy fraud, contact the authorities. Do not gather any information illegally, as that makes it invalid, but gather as much information as possible about the person/organization's finances. The IRS has special contacts for fraud cases.
If you are personally considering filing for bankruptcy, an experienced bankruptcy attorney can help you do it right. The Boca Raton bankruptcy attorneys of Eric N. Klein & Associates, PA have the knowledge and expertise you need to make your bankruptcy proceedings as painless and beneficial as possible. Contact them today for more information!
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