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What is the definition of bankruptcy fraud?

On Behalf of | May 12, 2022 | Criminal Defense |

Filing for bankruptcy in the state of Texas doesn’t have to signal the end. It can come as a result of investment losses or the closure of a business. But it shouldn’t be a cause for despair. With a bit of patience and effort, you can work your way out. The crucial thing is to stick to the rules and avoid fraud.

Bankruptcy laws are set up to punish fraud

The first thing you should be aware of is that committing bankruptcy fraud can be the basis for being charged with several kinds of felonies. The main danger here is that it is easy to commit fraud in this area without even initially being aware of it. It will be up to you to do all that you can to keep your bankruptcy on track.

For example, you may be tempted to avoid declaring certain items that have a high value. This may be in terms of economics or in sentimental value. You may be tempted to give these items to a friend or family member rather than declaring them. But this is an act that can be penalized as bankruptcy fraud.

You need to declare all your assets

Failure to disclose all of your assets hampers the ability of creditors to get back the money that they are owed. The system is thus counting on you to make an open and honest declaration of all of your assets. Your failure to do so bogs the system down. This is why the court can respond by filing charges against you.

Concealment of assets is the most common type of bankruptcy fraud. The common denominator for all of them will be the penalties that are attached for failure to comply with the instructions ordered by the court.