Filing for bankruptcy can greatly reduce your financial stress and give you a fresh start in life. It’s important to follow the law when filing for bankruptcy in Tennessee since failure to do so is a criminal offense that can lead to a lengthy jail sentence. Here are some ways that people knowingly commit bankruptcy fraud.
Concealment of assets is the most common type of bankruptcy fraud. This occurs when filers fail to list an asset because they don’t want to give it up, or they don’t want anyone else to claim a portion of its value. If you fail to include real estate, vehicles, businesses, bank accounts or stocks on your bankruptcy forms, you’re committing fraud.
Fraudulent business dealings
Some people file for bankruptcy when they want to clear debt from fraudulent businesses, and this is illegal. If you start a business using falsified documents or engage in misleading business practices, you are not eligible to file for bankruptcy.
A multiple filing scheme is when an individual travels from state to state filing bankruptcy claims using their own information or the information of family members, friends or people whose identities they’ve stolen. People who engage in this practice are committing fraud and may face criminal charges once caught.
Undervaluing or overvaluing your assets
It’s fraudulent to lie about the value of your property or the amount of cash you have at the time of filing. If you don’t know the true value of your assets, it’s a good idea to have your home, artwork, jewelry and other valuable items appraised prior to filing your bankruptcy paperwork.
If you transfer a home, car, business, boat or any asset into someone else’s name before filing for bankruptcy or transfer large sums of money into a friend or family member’s account before filing, you’re committing bankruptcy fraud. This practice is referred to as money laundering, and it is illegal.
It’s normal to make honest mistakes on bankruptcy forms. In most cases, however, bankruptcy fraud is intentional, which is why there are stiff penalties for committing this crime.