Bankruptcy Fraud Red Flags
Tax debts and criminal fines are among the kinds of debt that you cannot discharge when you file for bankruptcy protection. Another thing that filing taxes and filing for bankruptcy have in common is that it is easy to make mistakes on the paperwork, and the temptation is palpable to fib in order to reduce your financial burden, but you can get in big trouble if the authorities catch you in a lie. With bankruptcy filings, as with tax filings, there is a continuum between correctable mistakes and white-collar crime. Bankruptcy fraud is a felony, punishable by up to five years in prison and a $250,000 fine. As with all criminal fines, you cannot discharge this fine in a future bankruptcy filing. The best way to avoid this nightmarish scenario is to work with a Miami chapter 7 bankruptcy lawyer in your bankruptcy case.
Failure to Report Your Assets Accurately
The best way to avoid civil or criminal penalties for bankruptcy fraud is to tell the truth, the whole truth, and nothing but the truth on your bankruptcy filing forms. You don’t have to get every item of personal property appraised, but do not omit valuable assets from your bankruptcy documents or knowingly undervalue any of your assets. If the court wants to sell an asset that you reported, you always have the right to argue that the asset will be exempt; remember that many chapter 7 bankruptcy cases resolve without selling any of the debtor’s assets. If you conceal an asset and the court later discovers it, you lose the right to exempt that asset.
Selling assets to pay down debt is a good idea, especially if you are trying to avoid a bankruptcy filing. Selling property just so the total value of your assets will be less when the bankruptcy court processes your case will not win you any goodwill from the court. Giving property away or titling your assets in other people’s names to make it look like you do not own this property is even worse.
Taking Out Loans You Know You Will Not Be Able to Pay Back
Bankruptcy is meant to protect people who took out loans in good faith and have made every effort to pay them back but are suffering from financial hardship. Maxing out your credit cards in the months leading up to your bankruptcy filing will not make you seem trustworthy in the eyes of the bankruptcy court. If you have taken out lines of credit in the year leading up to your bankruptcy filing, you will have to justify to the court why you took them out and the efforts you made to repay them.
Contact a South Florida Bankruptcy Lawyer About Avoiding Bankruptcy Fraud
Bankruptcy filings are meant to be fair to debtors and creditors. A South Florida chapter 7 bankruptcy lawyer can help you file for bankruptcy protection and avoid mistakes that can get you accused of bankruptcy fraud. Contact Nowack & Olson, PLLC in Miami, Florida to discuss your case.