When entrepreneurs strive to create new businesses or businessmen and women make investment decisions, they are always sure of a fallback plan for when things go wrong. Though it should be kept as a last resort, bankruptcy can help people who have fallen into financial holes and have no way of getting out. By dissolving a company, selling all extraneous assets, and ensuring no extra money is being withheld, a person can keep some of their basic assets and have their debts to creditors discharged.
However, if the debtor chooses to hide some property or money from the bankruptcy courts, he or she is guilty of bankruptcy fraud. If a debtor’s files and records show frequent mistakes, the case may simply be thrown out and no bankruptcy given. If those mistakes or omissions appear deliberate, however, the consequences will be those befitting the crime. The most common cause of bankruptcy fraud is concealing assets. Even the omission of expected payments and assets can be considered bankruptcy fraud.
Both fines and jail time are possible punishments for bankruptcy fraud, depending on the amount withheld and the character of the debtor. The maximum jail time for false bankruptcy is 5 years, while the maximum fine is $250,000. The best ways to avoid these consequences are through complete honesty and total openness. If a debtor even questions that some of his or her property may be problematic on the bankruptcy files, he or she should err on the side of caution. A bankruptcy lawyer in Dayton OH can help clients guarantee they file correctly and can offer counsel to a debtor as needed.