Individuals filing for bankruptcy usually do it as a last resort, as they are unable to make ends meet and need assistance in restarting their financial life. Since it puts an automatic stay on foreclosure proceedings and ends wage garnishment and creditor harassment, the federal protection afforded by filing for bankruptcy allows the filer the opportunity to take a deep breath after struggling for so long.
However, these protections are only given to those Arizona residents who genuinely need them, not those who are lying to the court in order to get out of other legal obligations. The case of a California man who fraudulently filed for bankruptcy in order to avoid child support payments should serve as a lesson for those contemplating taking advantage of the bankruptcy option.
The 50-year-old man was in the middle of a contentious divorce when he began hiding his assets in order to avoid paying spousal and child support. He hid millions of dollars in bank accounts opened in other people's names before filing for bankruptcy. He then laundered the money back to himself through a company owned by his legal representative. His fraud only became apparent when he called the FBI and asked them to investigate his wife, never dreaming that his own fraud would come to light!
He was convicted of 15 counts of bankruptcy fraud and money laundering and sentenced to 17-years in prison, which is believed to be the longest prison term for bankruptcy fraud the federal courts in Sacramento have ever given.
Bankruptcy is one way people facing overwhelming debt can find relief and should only be used in this manner. Arizona residents considering this option may want to research their options and determine whether Chapter 7 or Chapter 13 bankruptcy suits them and how to go about filling out the forms honestly so as to avoid legal complications in the long run.
Source: Star Tribune, "California man who hid assets in divorce, bankruptcy gets 17-year sentence," March 5, 2014
