It is really intimidating filing for bankruptcy. Often people make mistakes on filing, or try to hide assets and property.
Filing for bankruptcy is an overwhelming decision. Actually sitting down with a skilled Iowa bankruptcy lawyer and reviewing your situation often causes anxiety. It is a big step and the whole process can be overwhelming, which is why it is a smart move to hire a qualified Iowa bankruptcy lawyer to help you get through the maze of rules and regulations.
Some people may be scared to admit to what they have in assets, because they do not know for sure what to declare. Others deliberately lie about their assets, property and spending habits. In both cases, not fully revealing all of your assets and complete financial situation may result in the court dismissing your bankruptcy petition. You may face penalties, fines and possible jail time. If you are facing bankruptcy, make certain you fully understand what constitutes bankruptcy fraud.
What many people do not realize is that it is possible to commit bankruptcy fraud before they file for bankruptcy protection, or even before they may be aware they may need to file. Sales or gifts of property or money during the two-year period before filing a bankruptcy are examined in minute detail by the bankruptcy court. The reason for this time frame is that, in most instances, bankruptcy means seizing and selling the debtor’s assets.
Some debtors then try to keep their property by transferring it to a family member or best friend. If property or other assets have been transferred during the two-year period, and the court deems the transfer was not for a legitimate and fair reason, they may find you liable for fraud. This is not the only way to commit fraud. In fact, another common method is providing false information to the court by leaving assets off the schedule of assets, or claiming exemptions that are not applicable. In both of these situations, the debtor is intentionally making a false statement to the court in the hopes they can get away with something. The court does not take bankruptcy fraud lightly.
Another method debtor’s have used to attempt bankruptcy fraud is to give a creditor a false statement. An example would be taking out a personal loan and stating your income was $60,000 a year. The bank would give you a loan based on that stated income, which is false. When you file for bankruptcy, the bank will ask the court to not declare the loan as discharged in the bankruptcy. If the credit institution is able to prove your statement of income was a lie and that your statement convinced them to loan your money, you will not be able to discharge that debt. In other words, you will still need to repay the loan after the bankruptcy has been processed.