What would happen if I committed bankruptcy fraud? 27 Answers as of August 13, 2011I may have over estimated how much debt I am in order to qualify for bankruptcy. I really needed what debt I had to be taken care of. Now the numbers arent matching up and I think I could be in trouble. What can I do?
The Law Office of Marvin Wolf | Marvin Wolf
Note to anyone reading this: Asking bankruptcy advice after filing bankruptcy is like asking for birth control advice after you get pregnant. Sometimes, it's too late. The misconceptions people have about bankruptcy are frightening. This is why people should have a lawyer and not file on their own. Bankruptcy law can be tricky. Deliberate bankruptcy fraud is a felony. People go to jail for it. For real. There is NO minimum amount of debt a person needs to have to qualify to file for bankruptcy. The law has no minimum amount listed in the statute. For example, I have filed bankruptcies for very small amounts of debt for senior citizens who had totally exempt assets just to stop the creditors from calling and harassing old people or going after their exempt bank accounts. So, lying about debt to make it more than it really is - I won't sugarcoat it - it's just plain stupid - and illegal, if done on purpose. If you saw a lawyer before filing he would tell you that only a complete moron would turn a financial problem into a potential criminal problem. The worst place to be less than honest is in front of a federal judge. There is no requirement that a debtor needs to be completely broke either. A debtor can file an amendment to correct incorrect information. There is a small fee for filing the amendment and some creditors may need to be served the amendment. However, a federal judge once wrote in an opinion that an amendment does not correct perjury. It is easier to amend before a trustee catches the problem than afterwards because an issue of good faith arises and the bankruptcy discharge can be lost. Will a trustee take things further? Depends on the trustee. The law is clear - ALL debts must be accurately listed in a petition, whether payments are current or not. If a debtor does not know and can't find out, that's why there is a checkbox called "unknown." The petition is signed under oath. Information on a petition is subject to audit - random audit or targeted audits are a part of the system just to keep filers honest. A debtor who cheats makes it harder on the debtors who are honest. Keep in mind that debt amounts do go up on their own due to default interest, late fees and late charges - so a higher number may not be off by as much as someone might think. Hypothetically speaking, unless the difference in amount is small, maybe a debtor in that situation might think getting a lawyer now might not be a bad idea. (Maybe even a criminal lawyer if the trustee has spotted something and is on the hunt or has forwarded the case to the Office of the US Trustee). It's usually cheaper for a debtor to retain counsel before filing to keep them from making a stupid and costly mistake than it is to hire one after getting caught trying to game the system. Disclaimer: I am not your lawyer and I am not giving legal advice - just basic legal information. I am a bankruptcy lawyer and federal debt relief agent.
Answer Applies to: New Jersey
Law Office of Asaph Abrams | Asaph Abrams
Due diligence must be exercised to ensure no error the first time around. Error may be rectified by way of timely amendment. In viewing the circumstances surrounding an amendment, considerations are made as to materiality, good faith, and whether unfair prejudice had/has been caused to a party. While fraud is a serious violation, what you allude to may be merely a mistake. This answer (as well as our Web site) doesn't address all facts & implications of the question; it's general info, not legal advice to be relied upon; it creates no attorney-client relationship; it may be pertinent to CA only; it's independent of other answers. Hire legal counsel before acting or refraining from bankruptcy/legal action.
Answer Applies to: California
Tucker Legal Clinic | Samuel Tucker
I think you have the concepts wrong...most people get in trouble by hiding debt, income, assets, etc... there is no particular level of debt necessary to file...my rule is you file before you lose something. Put the pencil to the paper. Determine what costs less.
Answer Applies to: Mississippi
Ross Smith, Attorney at Law | Charles Ross Smith III
Hmmm. exactly what did you do? And what kind of questions are being asked of you? Did you lie at your First Meeting of Creditors? You need to write back with a lot of specifics. This can be very serious. You should immediately consult your attorney on this, if you haven't already. The most likely result can be a "denial of discharge." This would leave you out in the cold with your creditors free to garnish and gnaw on your bones. If you were very bad, you can get 5 years in jail and a $10,000.00 fine. This is rare, but possible. You could offer to convert to a 13 Plan and pay your debts over 3 or 5 years at 0%. If your debts are really low, you may find this is a good idea. The only remedy is the truth. The absolute whole truth must be told from now on. Simply tell the trustee or the US Trustee what really happened and why you did it. Let the chips fall where they may. If your actions did not injure a creditor or inconvenience the Court too much, you may get off OK. You had a very human reason for exaggerating your debt. Go see your attorney and have a heart to heart talk. Good luck.
Answer Applies to: Ohio
The Law Offices of Kristy Qiu | Mengjun Qiu
Happens all the time. Nothing will happen if you list too much or too little debt, as long as all your creditors got notice of your case through the court (i.e. they were put on the mailing matrix and are on schedule D, E, or F). It's your creditors' job to prove how much you owe them. If you understand your assets, however, you might be charged for fraud.
Answer Applies to: Florida
Mankus & Marchan, LTD | Tony Mankus
You can always amend any schedules after you file bankruptcy, if you do it early enough in the process. In a Chapter 13 bankruptcy you have to be sure that the debts not exceed the allowable limts (In Illinois the unsecured debt limit is $360,475.00, and the secured debt limit is $1,081,400.00.) If you go over the limit, you have to convert to Chapter 11 bankruptcy. There are many other issues to consider and you should check with a bankruptcy attorney. You could be prosecuted for intentional fraud.
Answer Applies to: Illinois
Paul Stuber, Attorney at Law | Paul Stuber
There are many different types of bankruptcy fraud with as many different resolutions. If you only overestimated the dollar amount of the debt it should not be a problem. If the amount you listed was what you believed to be the amount you owed you have not defrauded the court. It is almost impossible to have exact matches with the amount you believe you owe and the amount the creditor believes that you owe. From what I can tell from your question you should not be in trouble.
Answer Applies to: Colorado
Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
If you entered the wrong information on purpose, or should have known better, than you can be found liable for fraud, could if serious enough be facing a fee, imprisonment, or both. However, if it was simply a mistake, amend the forms immediately and tell the trustee at your 341 hearing. I would want an attorney representing e if I was facing possible fraud charges! Good luck.
Answer Applies to: Michigan
Colorado Legal Solutions | Stephen Harkess
There is no minimum amount of debt required to file for bankruptcy, so it doesn't make sense why you would overstate your debts. This may not even be a problem, but I can't tell from your question exactly what the issue is. Bankruptcy fraud is a very serious matter that can land you in prison. However, most mistakes on your bankruptcy paperwork can be corrected with little ill effect. What you really need to do is to talk to an attorney about the specifics of your problem.
Answer Applies to: Colorado
Edward Papa, Esq. | Edward Papa
You need to see a bankruptcy attorney. You may be able to amend your filing without any consequences. Mistakes and misstatements get made quite often. Often they do not rise to the level of fraud but rather through misunderstanding of the law. If you filed pro se, then getting an attorney now to correct your filing may be advantageous. If you have already been charged with the bankruptcy fraud then you will need a criminal attorney.
Answer Applies to: New York
Ethan Myers Law Firm PLLC | Ethan Myers
As a right under the bankruptcy code you are always free to amend your schedules and you should, especially since you now know that the numbers were overstated- for whatever the reason. It's not a big deal. in fact I'm making amendments right now for one of my clients. What is a HUGE deal is committing bankruptcy Fraud. Even if the case has been closed a court can still reopen it for a good reason. Being in debt can add a lot of stress and extra weight to your shoulders. Sometimes that weight can feel like a ton- even if in reality it's only 1,500 lbs In closing, you might also be glad to know that there is no minimum debt amount required in order to qualify for bankruptcy. Hope this helps
Answer Applies to: Texas
The Law Office of Mark J. Markus | Mark Markus
I'm not sure I understand your facts. Are you saying you listed creditors that you don't really have? Or that you listed amounts owed incorrectly for creditors you do have? Either way, that doesn't sound like bankruptcy fraud to me. If you are concerned, you should have a bankruptcy attorney review your paperwork.
Answer Applies to: California
Lewis Adams and Associates | Lewis P. Adams
Amend your documents to correct the errors and simply file the changes with the Bankruptcy Court. You can amend your schedules anytime. Claims do not always match up with the schedules. If the income was altered, your case could be dismissed.
Answer Applies to: Utah
Law Office of Maureen O' Malley | Maureen O'Malley
You may be worrying for nothing. Fraud is an intent to lie and harm another by it. An estimate is just that. I assume your petition followed at least rounded-off numbers showing your debt? Sounds like you're reviewing what you gave v.s. what you have, which is reasonable. You can amend, if you need to, and explain discrepancies to the Trustee.
Answer Applies to: Virginia
Ashman Law Office | Glen Edward Ashman
It sounds like you made two mistakes - perjury, a felony, and being pro se (always a problem). Get a lawyer IMMEDIATELY. You have a legal emergency. You can go to jail for a maximum of 5 years and face a massive fine, and have your case dismissed. You could have lesser consequences that may screw up your case. The good news - a lawyer may be able to make proper amendments. If the changes make you ineligible, he may be able to seek dismissal or conversion to a different chapter. If they simply affect a case that can continue, the lawyer can salvage the case. And regardless, a well-worded timely amendment may prevent many problems. Get a lawyer and pay him for what he knows. It may be a life-saver. Hurry.
Answer Applies to: Georgia