Though filing for bankruptcy offers debt relief to those who are facing financial challenges, many people hesitate to avail this federally guaranteed protection because they don't want to seem like they are taking advantage of the system. This may stop many deserving and hard working people from filing for personal bankruptcy, which could prevent them from starting their financial life afresh.
This perception is unfortunately perpetuated when people do take advantage of the system and fraudulently file for bankruptcy. An Arizona real-estate developer is facing criminal charges because he did just that. While filing for bankruptcy, he attempted to hide $17 million in assets.
The 57-year-old collected millions of dollars from investors and in bank loans and bought shopping centers across the state between 1997 and 2008. After the real estate crash in 2008, the indictment issued against him alleges, he created another company in his sister's name but maintained control of it, and he transferred many of his assets to the newly formed company. He then filed for bankruptcy in 2011, claiming he had less than $1 million in assets compared to more than $140 million in liabilities.
However, his scheme was found out and his Chapter 7 bankruptcy petition denied, so his creditors can continue to try to recover their money from him. The man also faces numerous criminal charges, including bank fraud, concealing assets and falsifying records.
When filing for bankruptcy it is essential that Arizona residents make sure they are answering all legal documents as accurately as they can. They should also refrain from willingly or knowingly falsifying or concealing any information. If someone is really going through serious money problems, then he or she should not let perceived social stigma prevent them from filing for personal bankruptcy, which could provide much needed relief.
Source: Arizona Republic, "Feds charge developer Alex Papas with fraud, conspiracy," Catherine Reagor, May 14, 2015