Bankruptcy Crime

What is a Bankruptcy Crime? Bankruptcy crimes are like all other violations of criminal law except that they are offenses related to a bankruptcy proceeding.

Bankruptcy Crime
What is a Bankruptcy Crime? Bankruptcy crimes are like all other violations of criminal law except that they are offenses related to a bankruptcy proceeding. Being convicted of a bankruptcy crime can lead to fines and imprisonment for up to five years. A bankruptcy crime can be construed as many different offenses which go include the concealment of property from the Bankruptcy Court or a bankruptcy trustee; knowingly and fraudulently making a false oath or account; knowingly transferring or concealing property to defraud creditors; or to conceal, destroy, mutilate or falsify records or documents; or to file a bankruptcy petition to deceive or defraud as well as a myriad of other possible offenses.
Bankruptcy is a time honored practice which provides a way for honest debtors to obtain debt relief and a fresh financial start. No matter what type of bankruptcy they file, whether it is a Chapter 7, 11, 12, or 13, the bankruptcy system requires that all debtors be honest and forthright throughout the entire bankruptcy process. If a debtor voluntarily files for bankruptcy under any Chapter of the United States Bankruptcy Code, they are in essence subjecting all of their business and/or personal financial affairs, to the jurisdiction of the United States Bankruptcy Court. In turn they are expected to comply with the Bankruptcy Rules & Code in order to receive the benefits of Bankruptcy protection.
Most honest debtors do in fact comply with requirements of the Bankruptcy Court, Code & Rules. Their compliance is almost always a matter of course and routine. But sometimes, a debtor may accidentally make a mistake on their bankruptcy documents. Other times they may overestimate or underestimate the value of an asset. While these things may seem like “honest” mistakes or oversights to the average person, they could raise doubts about credibility with a Bankruptcy Trustee or even the U.S Trustee’s Office. That’s why it is very important to be as accurate as possible when you are preparing you bankruptcy paperwork. A trivial oversight might be considered an abuse of the bankruptcy system or even a Bankruptcy Crime.

In many cases, simple “honest” mistakes can often be amended, or reasonably explained to the Bankruptcy Trustee. In others, non-compliance with the Bankruptcy Code could result in a dismissal or conversion of the case, or may prompt a show cause hearing in the Bankruptcy Court. It can even initiate an investigation by the U.S. Trustee’s Office which can lead to criminal charges or a revocation of a bankruptcy discharge.

Always be truthful and forthright in a bankruptcy proceeding as lying or misleading the Bankruptcy Court, Trustee, and your creditors has serious consequences. While going to prison in relation to a bankruptcy case usually doesn’t happen, it is possible. Most of those who make honest mistakes can usually overcome them by a reasonable explanation or amendment to the satisfaction of the Bankruptcy Trustee. The bankruptcy system probably isn’t looking to prosecute a debtor who may have forgotten to list their family pet on the bankruptcy schedules as an asset. However, they are looking for instances where an individual or corporate debtor may be attempting to “abuse” the bankruptcy system by intentionally hiding assets, misstating the value of assets, misleading creditors, or illegally transferring property prior to filing for bankruptcy. These are the kinds of actions which can result in being charged with bankruptcy fraud.

Bankruptcy fraud is nothing to take lightly, especially when there is the potential for prison time. In the United States, bankruptcy fraud and other bankruptcy related crimes are Federal Crimes since the Bankruptcy Code, and all bankruptcy proceedings, are controlled by Federal law. The Bankruptcy Code is found under Title 11 of the United States Code and the criminal part the United States Code relating to Bankruptcy Crimes is found in Title 18 of the United States Code sections 151 through 158.

Bankruptcy fraud includes filing a bankruptcy petition or any other document in a bankruptcy case such as the bankruptcy schedules, or statement of financials affairs, for the purpose of attempting to execute or conceal a scheme or artifice to defraud. Bankruptcy fraud also includes making a false or fraudulent representation, false claims or promises in connection with a bankruptcy proceeding, before or after the filing of the bankruptcy case, for the purpose of attempting to execute or conceal a scheme or artifice to defraud. Sometimes bankruptcy crimes can involve other Federal offenses including enterprise corruption, conspiracy, embezzlement, fraud, and theft.

Certain offenses regarding fraud in connection with a bankruptcy case may also be prosecuted in state criminal court depending on the facts and involvement of the parties in the case. Some criminal prosecutions arising out of a bankruptcy case can include charges of theft of either goods or services that may have been obtained by the debtor for which payment, either in whole or in part, was evaded by the fraudulent bankruptcy filing.
While filing for bankruptcy can sometimes be the most responsible way to get debt relief and start over, it is very important to be completely honest about your situation no matter what your situation is. Lying, attempting to conceal assets or anything short of total disclosure could result in a revocation of your bankruptcy discharge, criminal charges, or in some cases prison.

A bankruptcy attorney can explain more about bankruptcy crimes and what you should and should not to do in a bankruptcy case. Just remember that when you sign your bankruptcy papers, you sign under penalty of perjury and are subject to criminal penalties if you make false statements. If you are simply honest, straight forward, and as accurate as possible in your case then you’ll probably never have to worry about getting charged with a bankruptcy crime.

Copyright: Copyright © 2008 RJ Atkinson LLP – Attorneys At Law

About the Author:
Rogena Jan Atkinson of The Law Offices of RJ Atkinson,LLP, (rjabankruptcy.com) is a bankruptcy lawyer & foreclosure attorney who has stopped thousands of foreclosures with bankruptcy. Visit www.rjabankruptcy.com to learn more about foreclosure and bankruptcy.


Local Articles
Legal
Home