Filing for bankruptcy in Florida is supposed to improve your finances. The bankruptcy law is designed to give forgiveness and second chances to individuals and business owners who are in unfortunate positions. Even so, some people decide to defraud the system and violate the rules outlined by state and federal courts.
Types of bankruptcy fraud
Concealment of assets is the most common type of bankruptcy fraud that involves hiding valuable assets from creditors and bankruptcy agents. This includes falsifying documents, withdrawing money or transferring it between accounts. When you file for bankruptcy, you have to report every asset that is of a high monetary value. The bankruptcy court calculates your total income and assets to determine if you qualify for bankruptcy.
People who cheat the system will hide their most valuable assets. They don’t want to reveal that they have more money than they report on their forms. They may also be afraid that their belongings will be taken away and sold by creditors.
Hiding cash and assets that you own, falsifying your bankruptcy application and transferring money out of your account are felonies in Florida and other states. Violating bankruptcy law is a civil and criminal offense that results in a felony conviction and a penalty up to five years in prison, a $250,000 fine or both.
Changes due to corruption in the bankruptcy process
Debtors, and some creditors, are not wholly honest about their financial plights. Fraud has always been a problem with governments that provide beneficial programs to disadvantaged members of the public. There is an increasing awareness of bankruptcy that is leading to increased oversight and penalties.