The average person filing for bankruptcy in Illinois has no intention of committing fraud. And if they are, they could be doing so unknowingly. But scammers and professional criminals commit bankruptcy fraud for huge payouts by manipulating the system or taking advantage of people in debt. To avoid being a victim, here’s an overview of how bankruptcy fraud works and the potential penalties.
What is bankruptcy fraud?
Bankruptcy fraud is the intentional or unintentional act of misrepresenting or omitting information to secure a more favorable outcome in a bankruptcy proceeding. There are many ways that someone can commit this crime, but they all have one common goal: to cheat creditors and get out of debt without paying what is owed.
How bankruptcy fraud works: Types of bankruptcy fraud
Hiding assets: The most common type of fraud is concealing assets to make it look like you have less money and property to cover all your debts. This way, you can pay back less money to your creditors. This crime is common because it’s effortless to commit. You can simply transfer assets to your friend or family member, hide money in secret bank accounts, or not disclose everything you have while filing for bankruptcy.
Making false statements: It’s one thing not to disclose everything you have in a bankruptcy case and quite another to report inaccurate information about your assets. For example, you can lie about your salary, employment history, or the value of a property like an art collection you may have.
Filing multiple times: This is probably one of the felonies handled by the federal government. Filing numerous times is a hefty crime because it takes advantage of the system in a way that significantly negatively impacts creditors. After taking a huge loan, scammers use multiple-filing schemes together with asset concealment while filing for bankruptcy in different states.
Bankruptcy fraud is a felony in Illinois. If the court finds you guilty, you could face up to five years in prison and pay $250,000 in fines.