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What is Bankruptcy Fraud?

We’ve recently seen multiple articles focused on bankruptcy fraud. Here are a few that have received attention from the media in the past few days:
Michael Mastro Bankruptcy Fraud
Toni Braxton Bankruptcy Fraud

So, how exactly did they break the law and how was it defined as bankruptcy fraud? When an individual files for Chapter 7 bankruptcy, it is legally required to provide all financial information to make your financial situation transparent to the bankruptcy trustee. The bankruptcy trustee should know about all assets, income, expenses, lawsuits, etc. They can ask for supporting information for anything related to the bankruptcy. If the bankruptcy trustee finds out that you did not provide truthful information to them to evaluate your bankruptcy, they can sue an individual for bankruptcy fraud.

We can look at a simple example to illustrate. In a bankruptcy petition, an individual should provide income information for the bankruptcy trustee to review. If you claim that you made $60K in one year, but the bankruptcy trustee finds that your tax documents show that you made $65K, it is not likely for you to get sued by the bankruptcy trustee, but you would need to make the adjustment to your income. If you claimed that you made $60k in one year and the bankruptcy trustee finds that you had received an extra $50k in your bank account and had obvious additional income, you are in danger of a bankruptcy fraud claim.

How can you avoid the same situation? At Bankruptcy Law Professionals, we have never had a client investigated for bankruptcy fraud throughout the history of the company. Bankruptcy fraud is illegal and BLP would never participate with any people/clients that would intentionally attempt to defraud the bankruptcy court. If you work with an experienced and dependable bankruptcy law firm, you will lessen the chance of any accidental fraudulent claims. A bankruptcy attorney needs to know how to properly structure your bankruptcy so that everything is clear and consistent for the bankruptcy trustee to evaluate. It is a sensitive situation which needs detailed examination and an intelligent attorney and organization as a whole.

Bankruptcy Law Professionals has Riverside bankruptcy attorneys and Orange County Bankruptcy attorneys ready to help you. Please contact us at (855) 257-7671 to schedule your appointment.

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