Despite the potential benefits it can afford to people deeply in debt, many in California seek to avoid filing for bankruptcy. Depending on the type of bankruptcy you file, it may involve selling off some of your assets, in a process called liquidation, in order to satisfy your debt. According to Cornell Law School, when a debtor filing for bankruptcy seeks to conceal or misrepresent the assets that he or she has in order to prevent their liquidation, he or she commits bankruptcy fraud.
Bankruptcy fraud can result in federal charges. If convicted of either the act or the mere intention of committing bankruptcy fraud, you can face a fine of up to $250,000, a prison term of up to five years, or both.
Filing for bankruptcy involves filling out a lot of paperwork and disclosing your assets. If you make a mistake or an oversight of some kind while filing, it is not bankruptcy fraud. For a bankruptcy fraud conviction, the court must demonstrate that you willfully concealed, omitted or provided false information regarding your assets.
The most common way to commit bankruptcy fraud is by concealing assets. One way of doing this is by transferring property to friends or family members. Another way is by willfully failing to report them to creditors, as they can only liquidate the assets you list. Concealment of assets plays a part in nearly 70 percent of all bankruptcy fraud cases.
The information in this article is not intended as legal advice but provided for educational purposes only.