December 15, 2019

FBI Warns Against Bankruptcy Fraud

My Bankruptcy Law Network colleague Rachel Foley from Kansas City has written a useful article on the Bankruptcy Law Network blog that brings to light a problem that many debtors (and perhaps many debtors’ attorneys) don’t think about too much – bankruptcy fraud.

FraudIn my practice I observe that when they come to meet with me many prospective bankruptcy filers are angry – angry at harassing creditors, angry at their employer for cutting hours or jobs, and angry at some of the rules that apply when one files bankruptcy.   Despite what some in Congress may say, no one wants to file bankruptcy and I have met many very nice, reasonable people who feel that they played by the rules and now they are going to have to start all over at age 40, 50 or older.

The net result of this anger sometimes is a sense of “us against them.”  Sometimes this manifests itself in an attitude that the debtor will follow the rules mostly but who is going to harm if they don’t reveal a cash payment to a relative or the transfer of an old car to a brother.

As Rachel points out in her fine post, this sort of an attitude can really get you in trouble.

When you sign your name to a bankruptcy petition, you are declaring under oath that the information contained therein is truthful and accurate.  If you leave something out intentionally you may not get caught, but, then again you may.  The  U.S. Trustee and the U.S. Attorney have been known to prosecute debtors to set precedent.

Attorneys give you long questionnaires for a reason.  If you leave something off and it later comes to light, we can turn to your original paperwork to confirm what was disclosed to us.  In this same vein, if you notice a mistake on your petition, advise your lawyer in writing.  Proving a verbal notice is difficult.  Further, given that there is a filing fee to add creditors it is unlikely that any lawyer would file an amendment without payment of a filing fee.

The bankruptcy process is not an enjoyable process, although it can put you on the road to financial recovery.  Don’t put the benefit of a bankruptcy discharge or risk criminal prosecution by intentionally leaving relevant information off your bankruptcy petition.

About Jonathan

Jonathan Ginsberg represents honest, hardworking men and women in the Atlanta area who need personal bankruptcy protection. In practice for over 25 years, Jonathan teaches bankruptcy law and practice at legal continuing education seminars and he is a founding member of the Bankruptcy Law Network. Jonathan lives with his wife and children in Atlanta.

Comments

  1. Me and my wife filed chapter 7. We got our tax return and went out of state to see about moving there as well as jobs and colleges offered. We can’t find any receipts and we paid cash for the whole trip and bought clothing etc. We then met with the trustee in person again in which we then got questions about the money. We provided a list that had approximate pricing of what we spent and where it was spent. We was still about $700 short but I can’t recall exactly what we spent where. Can we get in criminal trouble? We didn’t do anything wrong but we are scared !

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