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Bankruptcy is a state or condition, in which an individual or an organization fails to repay the debt amount with the absence of required fund. Federal bankruptcy proceedings can help honest individuals, who are troubled by debt due to several legitimate reasons like unemployment, medical crisis and divorce etc. However, this can also be utilized by unscrupulous elements or financial fraudsters who file bankruptcy to get reprieve from paying their debts. The U.S. Trustees Program, which is a part of the Department of Justice, is the authorized body to oversee the bankruptcy system. The organization refers cases related to bankruptcy fraud to the U.S. Attorney and FBI and FBI partners with federal agencies like Internal Revenue Service to probe such frauds. This article has answers to some of the most frequently asked questions on bankruptcy fraud and matters associated to them. What is the definition of bankruptcy fraud?
It is a type of fraud which is committed with an intention to not to repay the debt amount. In a situation like this, when a person falsely declare bankruptcy, it means that he or she is trying to conceal his or her assets. It may include his or her finances, properties and investments. What is the chapter 7 of bankruptcy fraud?
Chapter 7 of the Title 11 of the United States Code (Bankruptcy Code) governs the proceeding of liquidation available to consumers and businesses. Those assets of the debtor which are not exempted are liquidated to be distributed among the creditor or creditors. The consumer/debtor receives a complete discharge from debt under Chapter 7, except for certain debts which are prohibited to be discharged by the bankruptcy code. What is the meaning of fraudulent conveyance?
The transfer of the debtor’s assets to a third party, which intents to prevent the creditors to claim the assets is called fraudulent conveyance. In such cases, the creditors may file a petition claiming assets to recover their debts. There are two types of fraudulent conveyances. While the first one known as actual fraud involves the intention to defraud creditors, the second one, sometimes called constructive fraud involves a transfer, which is made in exchange for grossly inadequate consideration. What are the penalties for bankruptcy fraud?
Declaring bankruptcy can provide financial relief to a person who has genuinely gone bankrupt. But, people who use this as a tool to avoid paying their debts can be charged with serious federal offense which involves a jail term of maximum 5 years in a federal jail or a fine up to $ 250,000. How to file a bankruptcy fraud?
You must follow the below mentioned points while filing a bankruptcy fraud in a written form. • Name and address of the person or business you are reporting • The name of the bankruptcy case, case number and the location where it was filed. • Any additional information you have regarding the business or the individual • A brief description of the alleged fraud, with information on like how you came to know about this. Please validate the same with supporting documents. • Identify the type of concealed assets and their estimated value along with the value of unreported income, undervalued assets or the omitted assets or claims. • Your name, address and contact number along with the email id. What is the Statute of Limitations on bankruptcy fraud?
Usually, the statute of limitations for bankruptcy fraud is five years, but it varies by jurisdiction from state to state. The statute of limitations refers to the time frame within which a report should be filed against the debtor for committing a bankruptcy fraud. And after this time limit, a person can not be charged with the fraud. Is it possible for somebody to temporarily transfer a huge chunk of his assets to file bankruptcy?
This act would be considered as bankruptcy fraud. Filing bankruptcy means that a person is penniless and won’t be able to pay back any debts. If you have any questions on bankruptcy fraud related matters, you should always ask a criminal lawyer who can guide you better.
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