Sometimes, financial situations can spiral out of control for both individuals and organizations alike and they may find themselves in a predicament where they are burdened with more debt that they can manage and simply cannot afford to pay off their loans and will have to go ahead and file for bankruptcy.
When you file for bankruptcy, your creditors will not be able to sue you or liquidate and acquire your property and will instead have to go as per the instructions of the judge in the bankruptcy court where you filed for bankruptcy.
For the most part, the judge will be the one who decides how much, if anything you need to pay back and how you need to pay it back (timelines, installments, etc.) depending on how much property you owe and how much debt you are currently in.
This process has been setup to help helpless debtors who find themselves crushed and paralyzed by debts and to give them a second chance to start fresh. Many people believe GM should have gone this route, too bad they did not! Now America is still owed billions and will never be paid it back but this is another topic.
What is bankruptcy fraud?
It is not uncommon for someone to file for bankruptcy by making false claims just to be able to get away from paying back their debts even though they have the means to be able to do it.
Criminal defense legal pros, and there is no one better in this game than The Law Offices of Linda Louder who work hard for their clients and who have the legal acumen to defeat the opposition inside and outside the courtroom, explain that bankruptcy fraud is when someone:
- makes false statements under penalty of perjury either verbally or in a written statement
- files a false claim
- destroys or conceals financial records which are in connection to the case in hand
- receives, provides or offers a bribe, etc.
Any one of these will constitute as bankruptcy fraud in the eyes of the law and it is a federal crime which is punishable by law. Furthermore, not only will bankruptcy fraud be considered a crime, but also a civil wrong doing and so the person that committed the fraud maybe sued in civil court.
This is probably the most common form of bankruptcy fraud. In an order to keep the judge from knowing how much property and assets the debtor owes, sometimes the debtor may attempt to intentionally conceal assets.
Once a debtor files for bankruptcy, it is not mandatory that the creditor has to file a claim. Sometimes, the debtor may even attempt to bribe the creditor so that the creditor refrains from filing the claim and receives a cash payment instead.
Civil penalties for those sued for bankruptcy fraud may include, but is not limited to forfeiture of discharge rights and loss of exemptions. Criminal penalties may include:
- prison sentences
- hefty fines among other consequences
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