What Is Bankruptcy Fraud & How Can I Avoid It In Arizona?

Glendale Bankruptcy Attorneys Explain Everything About Bankruptcy Fraud

Our Arizona Zero Down Bankruptcy Attorneys discuss bankruptcy fraud. What bankruptcy fraud is and how to avoid it. Read on to learn how bankruptcy fraud may occur and how if you aren’t careful you may get drug into potential bankruptcy fraud. It is important to be represented when filing bankruptcy, it is always not as cut and dried as it seems. Contact our AZ Bankruptcy attorneys with further questions.

Bankruptcy fraud is a serious offense that you must avoid if you wish to discharge your debts. Committing bankruptcy fraud could result in your assets being seized by the trustee, your case being dismissed, or worse. The best way to make sure that you don’t commit bankruptcy fraud is to fully understand what it is. The next best way is to hire an experienced bankruptcy attorney in Arizona to represent you in this legal matter.

Fraudulent Debts

If you have accrued debt in an intentionally fraudulent manner, it probably won’t be dischargeable in bankruptcy. In this situation, your creditor will likely alert the trustee that their debt shouldn’t be discharged in the bankruptcy. They will receive a notification about your bankruptcy petition from your creditor mailing matrix. There are several reasons your creditors may object to their debts being discharged based on fraud.

Debts from bad checks and lines of credit where you misrepresented your financial situation in your application or submitted falsified documents can be excluded from your bankruptcy. You may have conducted your business in a fraudulent manner, committed tax fraud, or made large credit purchases shortly before your bankruptcy. You will need to attend an adversary proceeding if any of your creditors make this type of claim. This is in addition to your 341 Meeting of Creditors, and your attorney may charge you additional fees for the time spent representing you at this hearing.

Credit card purchases for luxury items totaling more than $725 in the 90 days before your bankruptcy will be deemed fraudulent. The same goes for credit card cash advances of more than $1,000 in the 70 days before your bankruptcy filing. Things like groceries, gasoline, utilities, and reasonably-priced shoes and clothing generally won’t be deemed as luxury purchases. Designer apparel, vacations, gambling, and other non-necessary purchases are more likely to be found to be luxury purchases.

Fraudulent Bankruptcy Petition & Documents

It’s important that you report all of your income and assets fully and honestly in your bankruptcy petition. Your trustee could be alerted to fraudulent activity by a creditor, another third party, or discover it through their own research. If you fail to list an asset in your petition, your trustee may take it and sell it at auction to pay your creditors. Your trustee will also look for any evidence that you transferred property to a friend or relative to keep it safe during your bankruptcy. You could provide a knowingly false document, or hide or destroy relevant documents to hide relevant income or assets. In a Chapter 13 bankruptcy, you could fail to report an increase in income to avoid an increase in your monthly payments. You could also lie to your trustee or creditors during your 341 Meeting of Creditors or any other bankruptcy hearings that you attend. These kinds of errors could result in not just your assets being seized and sold, but additional fines, delays in your case, case dismissal, disqualification from filing bankruptcy in the future, and even criminal charges.

Some fraudulent bankruptcy filers engage in even more egregious conduct. Bribing bankruptcy officials, embezzlement from the bankruptcy estate, filing bankruptcy in multiple jurisdictions at once, and filing bankruptcy using false identity information can result in a bankruptcy fraud conviction.

Can I Go To Jail For Bankruptcy Fraud?

Serious incidences of bankruptcy fraud can send the guilty party to prison. A famous example of this is Abby Lee Miller from the Lifetime channel hit show Dance Moms. Miller was convicted on 20 counts of bankruptcy fraud, a few of which are the most noteworthy. It’s important to keep in mind that your bankruptcy trustee is paying attention longer than just the day you file. If you are making payments in bankruptcy, they will need to be respectively increased with any significant increases in income. When Miller’s case was still active in 2015, a new spin off to Dance Moms aired- Abby’s Ultimate Dance Competition. This caused her trustee to further analyze her payment plan, as a new television show would presumably mean additional income for Miller.

The dance teacher filed due to approximately $400,000 in real estate tax debt. However, Miller had concealed about $775,000 of income during her bankruptcy- far more than enough to pay her real estate tax debts. Miller also taught a Dance Moms Australia masterclass tour in 2014. Miller had friends, some of whom are the synonymous “moms” from Dance Moms, split and smuggle $120,000 cash from that tour back into the United States to avoid a customs’ requirement to declare any cash over $10,000.

Miller eventually served 10 months in prison due to her fraudulent conduct during her bankruptcy. She was originally sentenced to 12 months in July 2017, but was released in May 2018 due to spinal cancer. She pled guilty in a plea deal with prosecution, and was also fined $40,000 and $120,000. Dance Moms actually returned for an 8th season in 2019, but the series was later canceled due to allegations of racist remarks by Miller. She is a clear example of just how serious the negative consequences of bankruptcy fraud can be. Someone who faces trial instead of taking a plea deal could face a harsher sentence, and Miller only didn’t complete her sentence due to the severity of her cancer.

Contact Our Zero Down Bankruptcy Attorneys Today!

Bankruptcy fraud will cause serious negative consequences in your bankruptcy and your life if you don’t take the proper steps to avoid it in your case. For a smooth, drama-free bankruptcy, you should hire an Arizona bankruptcy attorney that will guide you through every step of the process. But skilled guidance doesn’t need to cost you an arm and a leg- our attorneys offer competitive rates. We also offer payment plans that start your bankruptcy filing as low as $0 for qualified clients. Filing bankruptcy in Arizona may be a good option for you to move forward with a fresh financial slate. To get started, call or use our online form to schedule your free phone consultation.