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Bankruptcy Red Flags: How to Avoid Suspicion of Fraud When You File

red flagBankruptcy Fraud Red Flags

Filing for bankruptcy is a complicated process. It’s possible to file on your own, but it isn’t advised because even a simple unintentional mistake can result in your case being dismissed. Worse, you could be accused of bankruptcy fraud. Even if you have every intention of being honest, there are certain things that filers do that catch the attention of the bankruptcy court and call into question the filer’s intentions.

What are the most common red flags that raise suspicion?

Hiding Assets, Income, or Anything Else

The last thing you want to do is hide anything from the bankruptcy court or the trustee. When in doubt, share information with your attorney and he or she can instruct you how to be open about that information when you file for bankruptcy. It’s possible to protect a variety of assets when filing for bankruptcy and you’re better off sharing as much information as possible and taking the appropriate measures of protection than you are trying to hide anything.

Delaying Proceedings

Most people want their bankruptcy to move forward as quickly as possible. After all, you enjoy the protection of an automatic stay that prevents creditors from pursuing collections once you file and your debts will be discharged or made more manageable. If you appear to be delaying the process in any way the trustee is bound to get suspicious.

Transferring Assets

Though your intentions might be in the right place, transferring assets just before or after bankruptcy proceedings have begun will definitely arouse the suspicion of the court. Even if your goal is to sell an asset and use that money to pay a creditor, your actions could be called into question if you do something too close to when you file for bankruptcy.

For more information on transferring assets in close proximity to filing for bankruptcy, check out this information from Nolo.com.

Inconsistent Information

The bankruptcy court will review your application and look for certain things that might indicate a problem.

For instance, if your social security number is listed incorrectly, your tax documents are inconsistent or have numerous amendments, or you’ve bounced a number of checks, chances are you’ll be evaluated more closely than the average filer.

Other factors that can draw negative attention from the trustee include:

  • Filing for bankruptcy multiple times
  • Lacking the usual records or account information for review
  • Accumulating significant debt without showing an income to match
  • Running up large gambling debts

Furthermore, if there are any blank spaces or incomplete answers on your bankruptcy filing forms it could arouse the court’s suspicion.

Creditors’ Response

In general, most creditors accept their risk and know there is a chance a consumer could file for bankruptcy and they’ll lose out on the money they are owed. Most bankruptcy applicants make it through their Meeting of Creditors with little to no issues.

However, if a large number of creditors contact the court and call into question discharge of debts, it could cause the bankruptcy court to take a closer look at your situation.

Ask a Bankruptcy Attorney

Finally, it’s important to understand that the reputation of the bankruptcy attorney with whom you choose to work can affect your case. You should opt for someone who is reputable and known as a professional in the business. Robert Geller is a Board Certified Bankruptcy Lawyer. If an attorney has a reputation for working with clients who have tried to commit fraud, even if you have no intention of doing so, it can reflect poorly on your case.

For more information or to speak to a bankruptcy attorney, contact the Law Office of Robert M. Geller at (813) 254-5696.

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At the Tampa Bay law firm, the Law Offices of Robert M. Geller, P.A., we help people with consumer bankruptcy matters in the Tampa Bay-St. Petersburg,  Florida communities such as Clearwater,     St. Petersburg, Tampa, Thonotosassa, Riverview, Lutz, Plant City, Brandon, Carrollwood, Wesley Chapel, St. Petersburg Beach, Lakeland, Mulberry, Dade City, Pinellas Park, Largo, Seminole, Odessa, Oldsmar and Lithia, and counties such as Hillsborough County, Pinellas County, Pasco County, Polk County and Manatee County.