Avoid bankruptcy fraud by being thorough and proactive

Avoid bankruptcy fraud by being thorough and proactive

Declaring bankruptcy is one way Mesa and Phoenix residents struggling with debt try to make a new beginning for themselves - by wiping out most debts, they are often able to start again with a clean financial slate. Due to the current difficult economic times, there were more than 1.2 million bankruptcy filings for the year 2012. This means that during that year, more than 1.2 million people availed themselves of the legal protections offered via personal bankruptcy, either Chapter 7 or Chapter 13.

However, the system works well only as long as people do not try to defraud the system. Bankruptcy fraud is a crime that not only not only undermines the confidence people have in the system, but also blemishes the reputation of honest people who genuinely need protection under the bankruptcy statutes. By taking advantage of the protections afforded under bankruptcy, people who defraud the system increase scrutiny and make it harder for others to file.

Bankruptcy fraud can take many forms, such as concealing assets and failing to disclose ownership or payments pertinent to the bankruptcy filing. It may also entail transferring funds, assets and income to other's names to avoid letting them come under the purview of the bankruptcy court, trustee or creditors.

It is easy to become confused while going over the comprehensive paperwork required to file a bankruptcy petition. However, it is important to ensure that all financial matters are worked out properly. The statements and papers filed must be accurate and all the deadlines must be met, otherwise it can lead to problems later on. A legal professional can help Arizona residents through the bankruptcy process so that mistakes are avoided and a fresh start is within reach.

Source: IRS, "Bankruptcy fraud - Criminal investigation," accessed March 24, 2015

Categories