Recent economic downturns have caused an unprecedented rise in the number of bankruptcy claims being filed in America. Along with this increase, the number of cases of bankruptcy fraud have increased as well. This is due, in part, to an attempt by some people to disguise their fraudulent claims within the massive number of genuine claims.
Filing a claim of bankruptcy in order to defraud a bank or financial institution of money, goods or property is the general definition of bankruptcy fraud. However, there are many different ways that such a scheme can play out. The various factors that are involved in a particular bankruptcy fraud case play an important role in determining punishment if the alleged fraudsters are caught.
Charges of Bankruptcy Fraud
Cases of bankruptcy fraud can range from small to large and relatively simple to very complex. There are four main types of bankruptcy fraud that appear most often. These four types are:
- Hiding assets: Nearly 70 percent of bankruptcy fraud cases involve hidden assets. This fraud scheme requires the person filing the claim to not fully disclose all of their assets. By doing this, they prevent credit agencies from seizing these assets or properties, which can then be sold off later by the owner.
- Filing multiple claims: Some bankruptcy fraud scams occur when a person files for bankruptcy in more than one state. They may use their real name or a false name and identity. They may fully disclose their assets or hide some of them. No matter how they do it, filing more than one bankruptcy claim per individual or business is a prosecutable white-collar crime.
- Bribery: Although this type of bankruptcy fraud is rare, some individuals will actually try to bribe creditors or court officials with money, favors or services. This is done in order to ensure that some assets remain hidden or that some assets are not liquidated by the bank or credit agency.
- Overstating or understating assets: A more common type of fraud allegation originates with the claimant intentionally distorting the value of their property and assets. This can result in an inflated or deflated total value of their assets when reported to the creditors or the bank. Depending on the circumstances of a particular claim, this scheme could net the claimant thousands of dollars in illegal assets.
Talk to a Bankruptcy Fraud Lawyer in Houston, TX
Although bankruptcy claims are conducted according to strict federal guidelines, it is possible for claimants to make mistakes. If this occurs, an innocent person could find themselves charged with bankruptcy fraud. If so, hiring a bankruptcy fraud attorney is the most important step that person can take to protect their reputation, their property and their credit.