By Kitty J. Lin
If you are thinking of filing for bankruptcy, there are certain things you cannot do. If you do these things, you may be sued by the creditor for fraud. If the fraud charges are successful (meaning that the creditor wins the case against you), then whatever debt was associated with the fraudulent activity is not dischargeable and you will still be liable for the debt even after your bankruptcy case is closed. The following is list of some activities that should be avoided at all costs:
Recent Credit Card Usage
Once you have made the decision to file for bankruptcy, you need to stop using all sources of credit. Credit includes credit cards, cash advances, payday loans, obtaining personal loans. You may still use your debit card if you are worried about the convenience factor. Debit cards are okay as the funds are directly taken out of your own bank account. If you still continue to use your credit cards, obtain cash advances or payday loans, it may be considered fraudulent activity, as you knew you were filing for bankruptcy and still used credit.
When you file for bankruptcy, you are declaring under penalty of perjury that everything contained in your petition is true, correct, and accurate. If you are deliberately not listing some of your assets in the hopes of shielding them from your creditors, you could be subject to fraud and perjury charges. If you are convicted of fraud, it is a federal crime and you could potentially be fined up to $250,000 and/or five years in prison. Your hidden asset may potentially be liquidated to pay your creditors as well, depending on the value.
Transferring Asset Prior to Bankruptcy
If you transfer an asset to someone for less than fair market value (meaning you give it away for free, or charge $1 or some other ridiculously low amount for the asset), it may be deemed to be a fraudulent activity as well. Some people may transfer an asset to another party with the intention of getting that asset back after the bankruptcy filing. For others, it may be something as innocent as transferring the property to their children as the asset was originally intended for them in the first place (for example, if you obtained a car in your name due to lack of credit for your children, but they made all the payments). If it is found to be a fraudulent transfer, the bankruptcy trustee may void the transaction and liquidate the asset to pay the creditors.
There are many other types of fraud involved in bankruptcy, but the general rule is to be completely honest when disclosing your assets and complete disclosure of your financial situation. You are requesting the government to wipe out all your debt. You cannot obtain that discharge by lying about your situation. If you need help from an experienced bankruptcy lawyer in Fremont, California or bankruptcy attorney in Union City, please contact us at 877-9NEW-LFE or 877-963-9543 for a free consultation.