Fraud

Fraud is a deliberate perversion of truth done with the intention of attaining some valuable thing or promise from another.  A debtor guilty of fraud is deprived of a discharge in bankruptcy.  Debts incurred through a fraudulent act, under false pretenses or false representations are non-dischargeable in bankruptcy.

The Bankruptcy Code has prohibited debtors from discharging liabilities incurred on account of their fraud affording relief only to an honest but unfortunate debtor.  The burden of proof lies with the creditor of proving non-dischargeability by a preponderance of the evidence.  The creditor is required to request a determination of dischargeability based on the alleged fraud.

Bankruptcy fraud is an offense that takes different forms.  Debtors may conceal assets to avoid having to forfeit them.  Individuals may deliberately file false or incomplete forms or file multiple times using either false information or real information in several states.  Bankruptcy fraud may also include bribing a court-appointed trustee.

Illegal tactics in declaring bankruptcy include:

  • falsifying income and assets;
  • falsifying debt;
  • destroying or falsifying documentation or records;
  • conflicted interests; and
  • lying to the court.

Inside Fraud