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Risks of Attempting Bankruptcy Fraud

If we wanted to distill this blog post down to one sentence, it would be “don’t do it.” Bankruptcy fraud could seem tempting, but if you get caught—and chances are, you will—it’s a federal crime that has penalties of up to $500,000 in fines and five years in prison. Even if you accidentally commit Chapter 13 or Chapter 7 bankruptcy fraud in Montgomery County, TX, you could be liable.

Your best bet is to work with an experienced bankruptcy attorney so you don’t risk accidentally committing bankruptcy fraud. The process is often confusing and overwhelming to laypeople—let an expert help you navigate this uncharted territory and look out for your best interests.

Here’s an overview of what constitutes bankruptcy fraud in Montgomery County, TX:

  • Multiple claims: You can’t file for bankruptcy in more than one state, or use a fake ID to make multiple claims in the same state. Even if you think you won’t be found out, chances are, you will, and you’ll get into worse trouble than you were in before.
  • Hiding assets: The biggest way to get into trouble with bankruptcy proceedings is to hide your assets. You might want to try to save your car or home or savings by signing it over to Grandma, but this is actually considered fraud and will ruin your chances of getting a bankruptcy deal.
  • Making false statements: Similarly, if you lie—or leave out information, even accidentally—on your bankruptcy forms, you are committing bankruptcy fraud. This is another area where a lawyer can be especially helpful. A good lawyer will know what to ask you to cover all the bases, prompt you to remember assets you might not have considered and make sure you’re honest with the court.
  • Trustee fraud: Finally, trustee fraud—where the court-appointed bankruptcy trustee works on your behalf instead of being an impartial mediator between consumer and creditor—can rack up serious penalties.

What can I do to avoid bankruptcy fraud?

Avoiding bankruptcy fraud is a matter of disclosing every asset and piece of property you own, and not actively trying to defraud the government and your creditors. If you’re found to have committed bankruptcy fraud, even if your debt was discharged, the court can go back and revoke that discharge, leaving you stuck with paying the full amount after all.

Plus, there are the criminal charges to consider—most people don’t want to rack up half a million dollars in additional fines, plus jail time. Ultimately, it’s in your best interest to hire a bankruptcy attorney who will know how to handle your case.

Looking for the right bankruptcy attorney to help you avoid Chapter 7 or Chapter 13 bankruptcy fraud in Montgomery County, TX? James R. Jones, Attorney at Law can help. Our team is licensed in all state courts as well as the United States District and Bankruptcy Courts in the Southern District of Texas and the United States Court of Appeals for the 5th Circuit. Reach out to us today for a consultation.

James R. Jones, Attorney at Law.
James Jones, Esq.

Mr. Jones’ practice concentrates on business and consumer Chapter 7 bankruptcy
and he has been an attorney of record in several hundred such cases.