What Happens If You’re Accused of Bankruptcy Fraud?

If you’re an honest person, the idea of being accused of fraud might seem ridiculous to you. But if you’re an honest person filing for bankruptcy, accusations of fraud are a legitimate risk. The bankruptcy court has little tolerance for mistakes, even when they are honest ones. A Florida bankruptcy attorney can work with you when you file and help you avoid mistakes that could lead to accusations of fraud.

But what happens if something falls through the cracks? Or what if you tried to file without an attorney and now you’re facing a risk of dismissal of your case?

How can a Florida bankruptcy attorney help you if you’re accused of fraud?

First, it’s important to understand how serious accusations of fraud are when it comes to filing for bankruptcy.

Examples of bankruptcy fraud crimes include:

Filing false claims
Concealing assets
Making false statements under oath
Bribery
Embezzlement
Filing a fraudulent petition

If the bankruptcy trustee suspects you of fraud, you could be charged with a federal crime. Once they have what they believe to be proof of a crime, the trustee makes a criminal referral to the Office of the United States Trustee that then passes the issue along to the United States Attorney or the Federal Bureau of Investigation or other appropriate federal agency for investigation.

Accusations of bankruptcy crimes are serious. You are at risk not only of having your case dismissed but of also facing steep fines and jail time. You must do all you can when you file for bankruptcy to avoid suspicion of fraud.

What Happens If a Trustee Has Questions?

One of the smartest things you can do when filing for bankruptcy is to satisfy the trustee’s curiosity and questions about your case. Everything needs to make sense and be in order when they review your case. The trustee assigned to your case reviews your paperwork and compares it to additional documentation. This includes other information submitted by you, as well as what they receive from your creditors.

If something in your case raises the bankruptcy trustee’s concerns, they’ll launch an investigation.

The trustee also oversees your 341 Meeting. This is the time when they question you about your case and allow creditors to raise concerns if they disagree with anything in your case. During this meeting, lenders can raise concerns about inaccurate loan applications, suspect financial information related to a business, or questions about undisclosed property or income.

What Happens If a Trustee Suspects Fraud?

If the trustee overseeing your case suspects fraud but doesn’t have enough evidence to bring the issue to the court yet, they can conduct a Bankruptcy Rule 2004 Examination. This is an opportunity to examine:

Your actions, conduct, property, liability, or financial conditions
Matters that might affect the administration of the estate
Any issue that could affect your right to discharge

If the trustee believes they have enough evidence to bring to the court, they’ll file a lawsuit. This is known as an adversary proceeding. This is the legal process that allows them to get more money from you to give to your creditors. An adversary proceeding can lead to:

Setting aside fraudulent transfers
Turnover of hidden or undisclosed property
Objection or revocation of a discharge
Recovery of property

A bankruptcy trustee with proof of fraud can also seek emergency relief in the form of a temporary restraining order or injunction. This allows the trustee to take possession of assets n a pending bankruptcy case. In many cases, the order or injunction is given without even notifying the person in possession of the asset for fear it will be depleted before the trustee can take over.

Contact a Florida Bankruptcy Attorney to Help You Avoid Fraud Accusations

Bankruptcy is a complicated process. It’s possible to face charges of fraud even if you do everything you’re supposed to do. This is why it’s so important to work with a Florida bankruptcy attorney.

To learn more or to speak to someone about what you can do to ensure your bankruptcy case proceeds smoothly, contact the Law Office of Robert M. Geller at 813-254-5696 to schedule a free consultation.