Pre-Bankruptcy Actions That May Rouse Suspicions Of Fraud


If you are applying for bankruptcy discharge, look out for allegations of fraud from the bankruptcy court. The court can suspect you of fraud even for things you did before applying for bankruptcy. In particular, you should be on the lookout for such allegations if you committed any of these three acts before filing for bankruptcy:

Started a Business and Bought Items on Credit

You may have started a business with the intention of lifting your financial situation, but this can get you in trouble if you aren't careful. If you bought business items on credit, the bankruptcy court might suspect that you were trying to defraud your suppliers.

Consider an example where you start a mini bakery and buy some mixers and ovens on credit. If your business goes under and you have to apply for bankruptcy, there is a chance that sellers of the ovens and mixers may not get all their money. The bankruptcy court may accuse you of fraud if it suspects that this was your intention all along.

Transferred a Property

Pre-bankruptcy property transfers are always viewed with suspicion because it is one of the most common forms of bankruptcy fraud. The classical example involves a debtor transferring assets to friends or family members so that their creditors can't get hold of the assets. For example, if you have several cars and want to hide one of them, you can transfer it to an uncle or colleague and have it registered in their name. When the time for the bankruptcy discharge comes, you can just keep silent about the car and hope that the trustee or the creditors don't learn about the car's transfer.  Therefore, prepare to defend yourself from fraud allegations if you transferred a property just before applying for bankruptcy.

You Applied For Bankruptcy in another State

Lastly, you should also prepare for extra scrutiny if you had already applied for bankruptcy in another state but didn't see it through. Some people even change their names so that they can start the process afresh and defraud their creditors. Again, this is a method fraudsters use to maximize the value of exempt assets. Apart from that, but multiple applications also slow down the bankruptcy process and gives the applicant time to hide more assets, if that's their intention.

Not only can bankruptcy fraud slow down your bankruptcy process, but it can also lead to criminal proceedings. Fortunately, you will only be convicted of bankruptcy fraud if your actions are proven to have been intentional; you can't commit bankruptcy fraud unintentionally. Therefore, if you are facing allegations of bankruptcy fraud, consult a bankruptcy lawyer to help you with the defense. Visit websites like http://veldemoore.com to learn more.

About Me

Law Information Everyone Should Know

Hi, my name is Jessica Hawkins and welcome to my law blog. My mom and dad are both attorneys so I grew up with a lot of law talk around the house. Even though I decided not to become an attorney, I still have an interest in the law. Plus, when I visit my parents, that's all they want to talk about, so I still learn what I can about the law so that I can join in on the conversation. I wanted to create a blog to inform others about various aspects of the law. In this blog, you'll also find out about the different types of attorney specialties and when it's best to consult an attorney. I hope that you find my blog useful and that it helps to answer your law questions.

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