Bankruptcy fraud is a big problem in the United States.
It is very tempting to commit because, if successful, it can let the transgressor illegally profit with thousands of dollars to which they should not be entitled.
There are specific rules that define bankruptcy fraud.
The penalties, fines and possible jail terms, vary according to the state in which they are committed.
One type of fraud is knowingly making fraudulent statements to the bankruptcy court.
For example, one question that you will be asked is if you have filed for bankruptcy in the last seven years.
You may have filed for bankruptcy in another state or under another name and try to get away with filing for a second bankruptcy in another state thinking that you won't be found out.
But, if you do so, you have committed perjury and can be prosecuted for fraud.
A second type of fraud is where a filer attempts to conceal assets or properties that he owns from the bankruptcy trustee.
Naturally, no one wants to lose valuable possessions that they have acquired over the years.
Unfortunately, when you file for bankruptcy, most assets that you own become possible candidates for liquidation.
This is because the trustee is empowered to sell off as much of our assets as he can to raise money with which to pay back your creditors.
By hiding any of your assets, you are committing a fraudulent act upon the court.
A third type of bankruptcy fraud is when you knowingly run up debts prior to filing for bankruptcy with the intent of never paying the money back.
Many people look upon this as a harmless form of larceny because it is a big company that they are cheating.
The courts, however, look upon this much more seriously.
They, as well as the credit card companies, will strenuously push for prosecution in cases like this.
The above types of fraud are all committed by debtors.
But, fraud can be committed by a creditor as well.
For example, sometimes a creditor frustrated in getting the money he is owed from the bankruptcy court, will attempt to go around the court and collect money from the debtor in other ways.
If he attempts this after receiving notification that the debtor has filed for bankruptcy, he has committed fraud upon the court as well.
Since the new bankruptcy law has passed, creditors more than ever before, have become much more serious about enforcing the provisions of the laws.