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The Perils of Insolvency Fraud

The Perils of Insolvency Fraud
"""Each year, millions of individuals declare bankruptcy. A substantial proportion of those who file for bankruptcy perpetrate either intentional or unintentional bankruptcy fraud. This is a severe matter because a conviction could result in a prison sentence of up to five years.

In addition, if convicted, you will likely be fined and required to repay the money you stole from your creditors.

Current bankruptcy law is based on the notion that no creditor should be able to compel a debtor to repay a loan if doing so would cause damage to the debtor or his family. Therefore, if a person is genuinely unable to pay his debts, the court will grant him a discharge. If his petition is granted, he will be legally released from these debt obligations. The hope is that he can then start over and become a productive member of society once more.

To make this supposition true, however, the individual filing for bankruptcy must be truthful about his assets and liabilities. If dishonesty were tolerated, the law would essentially permit anyone who wanted to eliminate their debts to file for bankruptcy and, in the process, defraud their creditors.

However, many debtors attempt to defraud the system. Typically, they do this by omitting assets or concealing income from their bankruptcy filings.

A person with a valuable coin collection, for instance, may 'donate' it to a relative in order to prevent the bankruptcy court from liquidating it. Or he may 'neglect' to mention his out-of-state land holdings.

A second way that many individuals perpetrate fraud is by dramatically increasing their debt just prior to filing. A person may, for instance, charge thousands of dollars to his credit card. Then, once he has received the goods or services purchased with the credit card, he files for bankruptcy to avoid having to repay the credit card company.

The majority of the bankruptcy system relies on the good faith of those filing for bankruptcy. In each instance, a bankruptcy trustee will be appointed to the bankrupt individual.

But, as you might anticipate, the amount of diligence used to uncover all the facts in each bankruptcy case varies significantly. Consequently, many instances of bankruptcy deception are able to pass through the system undetected. However, this is not something on which the average person should rely. If your fraud is detected, you could be convicted of a crime and be financially worse off than before you filed.""

" - https://www.affordablecebu.com/
 

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"The Perils of Insolvency Fraud" was written by Mary under the Finance / Wealth category. It has been read 137 times and generated 0 comments. The article was created on and updated on 01 June 2023.
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