Questions about Bankruptcy Fraud? Contact Bankruptcy Attorney R.J.Atkinson
Bankruptcy is a time honored practice which provides a way for honest debtors to obtain debt relief and a fresh financial start. Whether it be a Chapter 7, 11, 12, or 13, the bankruptcy system requires that all debtors be honest and forthright throughout the entire bankruptcy process. If a debtor is not honest, accurate, or candid in the bankruptcy process, their actions can be considered fraudulent and they could ultimately face criminal charges, sanctions, a revocation of discharge, or other Court imposed remedies.
Bankruptcy fraud is nothing to take lightly, especially when there is the potential for prison time. Bankruptcy fraud and other bankruptcy related crimes are Federal Crimes since the Bankruptcy Code, and all bankruptcy proceedings, are controlled by Federal law. The Bankruptcy Code is found under Title 11 of the United States Code and the criminal part the United States Code relating to Bankruptcy Crimes is found in Title 18 of the United States Code sections §151 through §158.
So What is exactly is Fraud?
Fraud in its most general context is a deception made for personal gain. Fraud is an intentional deception or misrepresentation of a material fact which is made for the purpose of inducing some type of reliance or induction of reliance to the detriment of another. The detriment, or reliance, in turn causes damages to the defrauded party. Fraud is often difficult to prove in a lawsuit since it is usually necessary to demonstrate that the person who made a materially false statement to the detriment of another, actually knew it was false at the time.
Criminal Fraud: In criminal law, fraud is a crime or offense of intentional or deliberate deception of another in order to damage them. These damages are oftentimes, to obtain money, property, or services unjustly.
Civil Fraud: In civil law, fraud is a violation is known as tort. A tort is a civil wrongdoing for which the law provides a remedy. A civil fraud typically involves the act of intentionally making a false representation of a material fact, with the intent to deceive, which is reasonably relied upon by another person to that person's detriment.
Whether it be a civil fraud or criminal fraud, fraud can be difficult to prove since proving intention can oftentimes be a fairly gray area.
In a bankruptcy context, when fraud can be proven, it doesn’t matter whether it is civil or criminal because either way debts incurred by fraud cannot be Discharged in Bankruptcy.
Now there are very few situations where a debt is not discharged because of fraud because most people who end up filing for bankruptcy don’t usually plot and scheme to defraud their creditors. In fact of the thousands of debtor’s that the Attorneys at The Law Offices Of R.J.Atkinson have represented, few if any have ever been denied a discharge. Most people don’t really want to file for bankruptcy unless they really have to. If they do end up filing for bankruptcy because of a medical illness, job loss, divorce or other financial setback they didn’t have control over, they must be honest with their creditors. One of the hallmark’s of the Bankruptcy Code is to give “honest” debtors a fresh start. When someone avails themselves to the Bankruptcy Code for debt relief and protection of the Bankruptcy Court, they are required to be honest and forthright. Those who are not can face criminal charges.
So What is Bankruptcy Fraud?
Bankruptcy fraud includes filing a bankruptcy petition or any other document in a bankruptcy case such as the bankruptcy schedules, or statement of financials affairs, for the purpose of attempting to execute or conceal a scheme or artifice to defraud. Bankruptcy fraud also includes making a false or fraudulent representation, false claims or promises in connection with a bankruptcy proceeding, before or after the filing of the bankruptcy case, for the purpose of attempting to execute or conceal a scheme or artifice to defraud. Bankruptcy fraud is a crime punishable by a fine, or up to five years in prison, or both.
If a debtor or anyone else, knowingly and fraudulently conceals property of the estate from a receiver, custodian, trustee, marshal, or other court officer it can be a separate offense, and may also be punishable by a fine, or by up to five years in prison, or both. The same penalty may be imposed for knowingly and fraudulently concealing, destroying, mutilating, falsifying, or making a false entry in any books, documents, records, papers, or other recorded information relating to the property or financial affairs of the debtor after a bankruptcy case has been filed.
Bankruptcy fraud or debts incurred by fraud can include writing bad checks before filing with no intention to pay or not having any money in the account at the time the check(s) were written. In a credit card context, fraud can be claimed by a creditor if they believe the card was obtained using false information such as lying about income or assets, using the credit card and never making a payment, ever, or by using the card to live on or pay the minimum payments on another credit card. When you borrow from one credit card to pay another you set yourself up for a credit card company to make a case that you were insolvent when you started borrowing from one credit card to pay another. They could try to convince the Bankruptcy Court that you never intended on paying their credit card debt because you were broke when you incurred the debt. Also, obtaining credit card cash advances shortly before filing, making large purchases on credit cards before filing, could be argued as fraudulent by a credit card company.
Certain offenses regarding fraud in connection with a bankruptcy case may also be prosecuted in a Texas State criminal court depending on the facts and involvement of the parties in the case. Texas criminal prosecutions arising out of a bankruptcy case can include charges of theft of either goods or services that may have been obtained by the debtor for which payment, either in whole or in part, was evaded by the fraudulent bankruptcy filing.
The bankruptcy system probably isn’t looking to prosecute a debtor who may have forgotten to list their family pet on the bankruptcy schedules as an asset. However, they are looking for instances where an individual or corporate debtor may be attempting to “abuse” the bankruptcy system by intentionally hiding assets, misstating the value of assets, misleading creditors, or illegally transferring property prior to filing for bankruptcy. These kinds of actions can result in being charged with bankruptcy fraud.
If you want to learn more about Bankruptcy, or have questions about Bankruptcy Fraud contact the Texas Bankruptcy Attorneys at The Law Offices Of R.J.Atkinson. We have helped thousands get a fresh start in Bankruptcy and we might be able to help you.
If you live in Houston, Austin, San Antonio, Dallas, Waco, San Marcos, Plano, Sugarland, Denton, Richardson, Sherman, or most anywhere in the State of Texas contact the Texas Bankruptcy Lawyers at The Law Offices Of R.J.Atkinson. An experienced Texas Bankruptcy Lawyer can help you decide if filing bankruptcy is the best option for you to get rid of your debt, significantly reduce your debt, or reorganize your debt.
Bankruptcy Fraud — Contact Texas Bankruptcy Lawyer R.J.Atkinson
Texas Bankruptcy Attorney: 800-436-9056