Don’t Get Accused of Bankruptcy Fraud

Posted by William Kain on January 16, 2019 at 11:54 AM
William Kain

When you sit down with your bankruptcy lawyer, you’re going to have to hand over a lot of your financial records. Your attorney will then use those records to fill out the paperwork that will be filed with your bankruptcy case, which you will be required to sign. In signing the filings, you are stating that the information contained in your bankruptcy papers is complete and accurate.

But what if you made a mistake? What if you forgot something? Most people filing for bankruptcy are overwhelmed and under a tremendous amount of stress. An experienced bankruptcy attorney can help you through the process and help you avoid any mistakes you might make along the way. The suggestions below can help you get through the process smoothly and avoid being accused of bankruptcy fraud.

Understand the Purpose of Bankruptcy

We all know that people file for bankruptcy in order to get out from under their debts and make a fresh start. However, it’s important to keep in mind that bankruptcy doesn’t ignore your creditors - the process is intended to be fair for them, too. As a result, bankruptcy law places a heavy emphasis on complete and honest disclosure so that your creditors receive fair treatment.

Be Honest and Open with Your Bankruptcy Attorney

We know how hard it is to sit down with someone you don’t know and start talking about your finances. It’s natural to feel embarrassed, but keep in mind that an experienced bankruptcy attorney has probably seen hundreds, if not thousands, of cases. Rest assured that your case probably is not the worst case that they have seen and that they will not judge you. Don’t let your embarrassment keep you from being honest with your attorney - they can’t help you if you don’t tell them the truth.

Tell Your Attorneys about Any Recent Transfers

The bankruptcy court will want to know about any transfers of property or money that you made in the six years prior to the date you filed for bankruptcy. These transfers include private sales of property, the sale of a home or making a large gift to a friend or relative. These transfers must be made for fair market value and the transfers must be disclosed.Failing to disclose this kind of transfer can result in an accusation of fraud.

Disclose All of Your Assets

You can be accused of bankruptcy fraud when you fail to disclose all of your assets. People get into serious trouble when they try to intentionally hide assets from the bankruptcy court and their creditors. Bankruptcy law obligates you to disclose all of your assets, including real estate, cars, bank accounts, retirement accounts, and investment accounts.

When working with your attorney, give careful thought to your finances to make sure you’re not missing anything. It’s not uncommon for someone to forget about an old savings or investment account that they haven’t touched in years.

Accurately Value Your Assets

In addition to disclosing all of your assets, it’s just as important to accurately report the value of those assets. While value is always somewhat subjective, you can’t simply estimate an asset’s value or report what you think it’s worth. For example, you might think your house is worth only $300,000, but a realtor might think it’s worth much more than that. Your attorney has access to certain resources that can help you value the asset fairly and accurately.

Include Your Disputed Debts


If your creditors are pursuing collection efforts and demanding payment, you might actually dispute some of those debts. They may be claims that you’re certain you paid, or maybe you feel you shouldn’t have to pay. Maybe you agree that you owe the original debt but disagree with the fees and other charges that have been tacked on. As a result, you haven’t paid them because you either can’t agree on the amount due or feel that the debt is unjust. You may have even been sued, and have disputed the debt in court.

In these situations, many people mistakenly think that they shouldn’t include these debts in their bankruptcy filings. Unfortunately, this is not the case, and failing to disclose these debts could be considered fraud. Bankruptcy law requires that you disclose all of your debts, even those debts that you feel you do not owe.

As an aside, you can still dispute these debts, and the bankruptcy court can include this dispute as part of your bankruptcy case.

Disclose Any Assets You Expect to Receive

Even though you don’t yet have them, you also need to disclose any assets that you are entitled to receive in the near future. Common examples include a pension or other retirement income, an inheritance, or a legal settlement. Creditors may be entitled to be paid from this future income.

Contact a Minnesota Bankruptcy Attorney for More Information

Bankruptcy paperwork can be very confusing for non-lawyers, and you can quickly find yourself accused of fraud as the result of an honest mistake. With decades of experience, the bankruptcy attorneys at Kain & Scott help Minnesotans get through the bankruptcy process as smoothly as possible so that you can move on with your life. Call us at 800-551-3292 or contact us online if you would like to schedule a free consultation with one of our dedicated bankruptcy lawyers.

Topics: St Cloud Bankruptcy, Bankruptcy Fraud

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