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Criminal Offenses with Bankruptcy

Posted on in Bankruptcy
Criminal Offenses with Bankruptcy

When an individual, organization, or business entity faces more debt than can be managed, they sometimes opt to file for federal bankruptcy. Filing for bankruptcy protectors debtors from creditors who are pursuing the unpaid debts. If the bankruptcy petition is granted in federal court, the judge will look at:

  • The property owned
  • How much money is owed
  • Who the money will be repaid to

The repayment process will then begin and allow the debtor to have a fresh start. However, when someone has filed for bankruptcy and violate federal bankruptcy law, they have committed criminal bankruptcy fraud and will thus be charged with the crime.


In order to be charged with criminal bankruptcy fraud, the prosecution must prove that the offender possessed the criminal intent to commit bankruptcy fraud. Bankruptcy fraud cannot be committed unintentionally, but rather the offender must have knowingly and intentionally misled the bankruptcy court, creditors, and any other parties involved in the bankruptcy process.


One example of bankruptcy fraud is bribery. Under such a circumstance, a debtor may attempt to bribe a creditor to not file a claim by offering the creditor payment in exchange for the creditor's cooperation.

Concealing Assets

A debtor may also commit bankruptcy fraud by attempting to conceal his or her assets. The bankruptcy court takes into account exactly what the debtor owns when determining the terms of the bankruptcy order. Hiding property from the court is a tactic used to prevent the court from using such assets to pay off the creditors or to hide how much the debtor is able to pay.


Scammer companies may prey on homeowners and renters who are facing eviction or foreclosure to commit bankruptcy fraud. These companies will charge the consumer a fee to stop the foreclosure or eviction process and then file bankruptcy in the consumer's name without the consumer's consent. Once the court discovers that the consumer was not a participant in the bankruptcy filing, the scammers often disappear with the consumer's money.

Other Fraudulent Acts

A debtor may also face criminal bankruptcy fraud charges for:

  • Destroying documents
  • Making false statements to court officials
  • Filing for bankruptcy in more than one state
  • Criminal Penalties

Those who are charged with bankruptcy fraud may face criminal penalties such as:

  • A prison sentence of up to five years, with the option to increase the term based on the amount of offenses committed
  • Probation for one to three years
  • Monetary fines of up to $250,000 per count of fraud

Any of these penalties can be combined or can be imposed on an offender individually, depending on the circumstances of the case.

Are You Involved in a Bankruptcy Proceeding?

If you are involved in a bankruptcy proceeding, whether as the one seeking bankruptcy relief or the creditor seeking funds from the debtor, it is important that you seek legal assistance. Bankruptcy proceedings involve complex federal laws which may result in heavy civil and criminal penalties. At the Law Offices of Newland & Newland, we are equipped with a team of lawyers who are highly experienced in bankruptcy issues and are qualified to guide you through your financial situation. Contact our office today to schedule your consultation.

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