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What constitutes fraud in bankruptcy could be deceiving

On Behalf of | Dec 5, 2019 | Bankruptcy

You’re considering bankruptcy to get yourself a better tomorrow. But sometimes innocent moves you’ve made with assets in the past can affect your filing for the future.

Hiding assets in bankruptcy proceedings is a serious offense, one that constitutes 70% of all bankruptcy crime. But concealing property you own doesn’t just involve leaving your possessions off the list. Fraud can come with transactions you make that may impact your filing, even from years prior.

Coming up short

Getting rid of your assets to short-change your creditors can be considered fraud, and Florida courts could look back as far as four years into your history. Even if you haven’t been planning your fraud over half a decade, some instances can appear as though you’re circumventing your responsibilities:

  • Buying high, selling low: Selling property under fair market value could certainly fall into this category. Getting rid of your property far below what it’s worth can raise some red flags. It may appear that you’re dumping assets to keep them out of the hands of creditors.
  • Keeping it in the family: Gifting assets to your family or friends may seem like an altruistic gesture, but the courts may not see it that way. Transferring property to those close to you may look like you’re trying to make sure you can still have access, or that you want someone to benefit other than those that have a claim.
  • Dealing in secrets: Failing to mention transactions on your disclosure forms could certainly draw attention. You’ll likely need to report significant transfers that could affect the bankruptcy process, so leaving anything out is usually frowned upon.

Make sure you understand what types of transactions courts allow allowed when you consider bankruptcy. Running afoul of regulations could lead courts to investigate possible fraud allegations to ensure creditors get their share.

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