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Home » Consumer Information » White Collar Crime » Financial Crimes

Bankruptcy Fraud

Bankruptcy Fraud has become a major problem in The United States. Several agencies have come together to fight against this crime, including the FBI, U.S. Attorneys' Offices, Internal Revenue Service Criminal Investigation, and the U.S. Secret Service. This combined group is responsible for creating Operation Truth or Consequences, the name given to their mission of putting an end to this financial fraud.

What is bankruptcy fraud?

People declare bankruptcy when it becomes impossible to pay back creditors. Usually it is done as a last resort when the amount of debt one incurs is far greater than the amount of their income. It is a means of declaring that you do not have the money to settle any outstanding debts, and wiping those debts out. Scammers take advantage of this system by purposely running up large debts that they have no intention of attempting to pay back. There are several common types of bankruptcy fraud criminals utilize:

Concealing assets

When a person files for bankruptcy, the personal belongings that they still owe money on and can not pay for will be repossessed. Scammers will purchase items and attempt to conceal when declaring bankruptcy. They may claim the items were given as gifts, or sold at a garage sale in an attempt to raise money. Once the bankruptcy case is over, the criminals keep their ill gotten goods or sell them for profit.

Improper forms

Some scammers will give false information on the forms they fill out to declare bankruptcy. They will lie when answering certain questions or provide misleading information. In many states, providing false information on bankruptcy forms is considered to be perjury.

Multiple declarations

An individual may commit fraud by filing several times for bankruptcy, usually under several aliases. The perpetrators of this type of fraud will commonly file in multiple states, and conceal assets in every case.

Bribery

Any time a court-appointed trustee is offered a bribe, it is a serious crime. Bolder criminals may try to bribe officials in order to get them to go along with illegal schemes.

What is being done to stop it?

The FBI has implemented a plan in an attempt to stop this financial crime. They have formed special task forces to watch for fraudulent claims, and they have created tough consequences for anyone caught breaking these laws. There are three groups that are targeted in this plan:

  • People who attempt to conceal their assets.
  • People who file several claims.
  • Those who utilize bankruptcy fraud as part of an organized crime scenario.

The fight to clean up the national bankruptcy system rages on. The public is being asked to help out by notifying the Department of Justice if they suspect anyone of committing this crime. Every tip will that is submitted to the department will be followed up on.