Doing These Things Can Lead To Big Problems In Your Bankruptcy
Let’s say that you are filing for bankruptcy. You have only the best intentions and you certainly have no intention of deceiving anybody, defrauding anybody, or hiding anything from the bankruptcy court. But then your bankruptcy attorney tells you the court or trustee thinks that you have done something suspicious, and the court or the trustee suspects bankruptcy fraud.
How does this happen? What do good-minded people do, often accidentally, that lands them in trouble with the bankruptcy court?
Transferring property or closing accounts
Whether in anticipation of bankruptcy or for some other reason, many people will take their names off of property or assets that they own. They may remove themselves as owner of a business, remove themselves from the title of a car, or close bank accounts in their name.
The end result of any of these may not benefit the debtor, or yield them any money or property–but they are still big no-nos before bankruptcy, and doing these things can make the bankruptcy trustee very suspicious of your motives.
Again, sometimes this is done innocently. Property that has no lien–say, a car that is paid off–is suddenly encumbered; the debtor takes a secured loan out with the property as the security. Suddenly, property the debtor owed free and clear now is not free for creditors to take.
Acquiring liens, or liening property before you file for bankruptcy, can easily be seen as bankruptcy fraud. However, there are some cases where you could sell your current car and roll it over into another car that has a lien on it, and the same applies with a home. If you need to sell property with equity and buy new property that has no equity, you should talk to your bankruptcy attorney first.
Using credit cards
Running up debt on credit cards when you know you’re filing for bankruptcy is a sure sign of bankruptcy fraud.
In some cases, the court may allow you to use cards before bankruptcy, if you are using them only for life necessities, like food or gas or utilities or rent or mortgage. But absent that, any type of charge that is not an absolute life necessity will be seen as fraudulent-especially if you are “maxing out” credit cards, or charging in a way that is different from how you have traditionally used your credit cards.
Not handing over documents
Certainly, many debtors innocently don’t provide all the documents they are supposed to provide. In most cases, the trustee just asks for the missing documents. But in some cases, failing to provide complete financial documents can make the trustee think you may be trying to hide something.
Not listing all of your property
Many debtors, innocently or not, fail to list all of the property that they own. Many fear that just because they list property, it will be taken even though this is a myth. However, when you leave things out, bankruptcy trustees get suspicious. This is especially true when you start omitting things that most everybody has–televisions, cell phones, or computers.
Remember with all of these situations, you aren’t just inviting the allegation of bankruptcy fraud. Even if the bankruptcy trustee sees that what you are doing may have been innocent, individual creditors can still object to your bankruptcy, making the process much more complex.
Contact the Boca Raton bankruptcy attorneys at the Law Offices of Stephen Orchard at 561-455-7961 today to make sure your bankruptcy is handled the right way.