Residents of Springfield and other nearby areas of Missouri may want to learn more about how bankruptcy fraud works, and how the government sees it. This type of fraud saw an increase, as the stigma attached to bankruptcy lessened after the early 2000s.

According to howstuffworks, in tough times, the U.S. bankruptcy system has the goal of getting people back on their feet. However, debtors sometimes are not quite fair, when it comes to repayment to their creditors. Creditors also abuse the system, but to a lesser extent than debtors.

What are the most common types of bankruptcy fraud?

Concealing assets is the most common type. It comprises nearly 70% of cases. Sometimes a debtor purposely leaves something off his list of assets, so they won’t be sold to pay the creditor. Even if you give an asset, such as a diamond ring, to a family member temporarily, you are committing fraud. That is how your “gift” may receive interpretation; both of you would be guilty.

Petition mills commit bankruptcy fraud

Charging you a fee, they promise those facing eviction or foreclosure that they can remain in their home. Meanwhile, they take your money and then file a bankruptcy in your name. It can slow the bankruptcy, but if you do not know about it and are not on board, it will still proceed, and the eviction will resume.

Other forms of fraud

When it comes to bankruptcy fraud, there are many actions that may be viewed as federal offenses. These include the following:

• Making false statements or leaving questions unanswered
• Filing multiple bankruptcy petitions; this is in the same state
• Bribing a court-appointed official
• Purchasing items on credit while starting a business, with intention of filing for bankruptcy
• Lying by a creditor

On the lookout

The Department of Justice’s U.S. Trustees Program (USTP) is the key player in identifying fraud. It oversees the bankruptcy program. They may alert the FBI, in some cases.

Bankruptcy should happen only in serious circumstances. However, bankruptcy fraud may happen intentionally or be an honest mistake.