Avoid these bankruptcy frauds by all means

If you are about to take an important step to solve your financial hardship and get rid of the debt burden, here is the great piece of advice what you should not do when filing for bankruptcy.

Unfortunately, many people are tempted to soften a bitter taste of bankruptcy status by trying to fool U.S. bankruptcy court by providing fraudulent information. Remember: sooner or later the fraud will be revealed and instead of making your life easier you will get a bunch of serious complications, starting from fees to getting restricted from further attempts to file.

Here is the list of most often bankruptcy fraud you should avoid by all means. You may read online stories of people who’ve been through all that to make sure that bankruptcy court is not the place to play games.

Hiding the property and concealing assets

This is one of the most common ways to involve you into troubles prior to filing for bankruptcy.

It is a well-known fact that bankruptcy means a foreclosure of assets in order to sell valuable property to satisfy interests of creditors. Individuals, who don’t want to give up the property, are trying to make property over to their relatives or spouse in hopes to keep assets out or foreclosure.

Hiding the property

This may work in rare cases, but most often your trick will be revealed by the Trustee (a specialist who is appointed by the court). All your operations with the property that have been made the preceding year will be checked thoroughly. In a case they will find your attempts to hide property to avoid foreclosure, you will face appropriate consequences. For more detailed information – call to any bankruptcy lawyer to have a first free consultation.

Still, when you file for Chapter 7 (liquidation bankruptcy), your lawyer, if experienced and qualified enough, can manage to save the most of your assets (even a home in some cases). Everything which is aside from it will be qualified as a dishonest act against U.S court.

Not showing all your sources of income

To make it for Chapter 7 that is more beneficial than Chapter 13 you will need to pass Means Test and get a certain score. You will be asked to put your summarized monthly income, so you should include all sources of money you have. Even if you work somewhere freelance and get just 200 additional dollars – you have to show it to the bankruptcy court. Based on that it will become clear whether you qualify for Chapter 7 or not.


Many try to underreport their income to be eligible for liquidation Chapter, but you are strongly advised to not to try to fool the court.

If your monthly income is enough to cover at least a fracture of your debts, you may be offered to apply for Chapter 13 (reorganization bankruptcy). If your financial misinformation will be revealed, you will be restricted from further filing and charged penalty.

Multiple filing fraud

Some people, in order to maximize their chances to get bankruptcy petition approved, file in different states at once. They just send papers to states courts in order to slow down the legal process. The thing is, right after the petition for bankruptcy is sent to the court, the automatic “stay” mode is on and since then no creditors or collectors are allowed to disturb the debtor. Through sending multiple petitions to the different courts (either under own real name or using fake data), a debtor tries to win some time before his assets and property will be foreclosed due to bankruptcy.


Multiple filing brings a lot of complications to the court system, but in fact, it is not a criminal act itself, according to the law.

Not notifying a court about upcoming inheritance

Another severe bankruptcy law violence is not letting a court know about upcoming funds that you are going to receive shortly. It can be anything – salary growth (if you are aware of it), inheritance or other financial help from anyone.


There are many cases when people, after receiving notification about inheritance on their name, trying to file for bankruptcy as soon as possible to get rid of debts and have a fresh start with received inheritance. They are trying to hide that they knew about upcoming financial support, but usually, it doesn’t work. The court checks all documents related to one’s personal finance and possible inheritance, so there are 99% chance he’ll be caught on it.

The U.S. bankruptcy court has access to all legal documents ever appeared in the unified database, so attempts to fool the court will inevitably lead to sanctions and penalties.

Consequences of bankruptcy fraud

When it comes to bankruptcy you must tell the truth and only truth as bankruptcy fraud is a serious federal crime with the appropriate consequences. You may literally ruin your future by one simple fraudulent act and this dark spot will stay in your biography forever.

The records about your dishonest acts and fraudulent information will stay in database for years.


Depending on the type of fraud a person commits, one or several consequences will follow:

  • A person can be charged for up to $250.000.
  • An individual may face up to 5 years in jail with (or without) fee for intentional providing misleading data.
  • A person can be prohibited from another filing for a certain period of time. Don’t mistake this with the situation when the person received a petition denial due to being non-eligible for bankruptcy. In this case, he cannot file again until 6 or 8 months are passed.

In a case of a denial due to bankruptcy fraud, a person can be prohibited from repeating filing for several years.

Leave a Comment