Live Chat
During This Challenging Time

We are open for business and remain dedicated to your case! All those working on-site and remotely are still available to answer your questions. The well-being of our clients and staff are vital, so we will provide updates as the situation progresses.

During This Challenging Time Close

What Is Bankruptcy Fraud?

March 18, 2013

Bankruptcy fraud is a generic term that applies to criminal acts committed during the bankruptcy process. The federal law contains bankruptcy-related prohibitions such as concealment of assets, concealment or destruction of documents, conflicts of interest, fraudulent claims, false statements or declarations, and fee fixing or redistribution arrangements. Often a crime under the bankruptcy fraud statutes is committed in conjunction with crimes such as credit card fraud, identity theft, mortgage fraud, money laundering, mail and wire fraud, etc.

The Federal Bureau of Investigation (FBI) is the primary investigative agency responsible for addressing bankruptcy fraud. The FBI often partners with other federal agencies like the Internal Revenue Service to investigate bankruptcy fraud. In some rare cases a debtor may have violated a state law criminal statute and a local or state prosecutor may become involved.

Bankruptcy fraud is an intent crime, which means that the debtor must have a “guilty mind” when committing the act. Consequently, hiding assets and lying to the bankruptcy court or trustee is criminal. On the other hand, strategic bankruptcy, planning your bankruptcy case with the assistance of a licensed attorney, is not criminal. For instance, selling your car to your brother for $100 is fine, if the car is actually worth $100. Selling it to your brother for $100 when it is actually worth $5,000 may be criminal. Let an experienced bankruptcy attorney advise you before making any financial transfers.

An investigation of bankruptcy fraud begins with the U.S. Trustee Program, part of the Department of Justice. When a bankruptcy trustee encounters suspected fraud, he or she may refer the case to the U.S. attorney and to the FBI. Not every case is sent for criminal prosecution. The trustee can request civil penalties from the bankruptcy judge, such as dismissing the case and/or denial of bankruptcy discharge. In some extreme cases a debtor engaging in fraud may be prohibited from filing bankruptcy again.

Avoiding bankruptcy fraud is easy, simply fully disclose your financial situation and remain honest about your assets and income. In bankruptcy, honesty is the best policy. If you are in financial distress, call an experienced bankruptcy attorney to learn how the federal law can help.



Use the form below to send us a note, call us at 214.890.0711 or chat with us live. We are eager to help with your legal needs. Please keep in mind that any unsolicited information sent through our website cannot be treated as confidential. Contacting us through this site does not create a representation relationship with Fears Nachawati.

Contact Us


With offices across Texas, and attorneys licensed in Texas, Florida, Arkansas, New Mexico, California, Illinois, District of Columbia, Missouri and Oklahoma, Fears Nachawati is dedicated to attaining the best possible solutions for our clients’ business and personal needs. We strive to be professionals who are creative, empathetic and reliable.

All Areas Served

We Can Help

Contact Fears Nachawati today

Free Consultation

Live Chat (Online Now)