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Home » Nashville Bankruptcy: Chapters 7 and 9 » What is Bankruptcy Fraud?

What is Bankruptcy Fraud?

bankruptcy-fraudCrimes related to fraudulent behavior are far from restricted to the realm of bankruptcy. However, committing “bankruptcy fraud” often translates to guilt in a variety of other types of fraud crimes — for example, tax and credit card dishonesty. If you’re accused of committing bankruptcy fraud, or simply the victim of such a crime, it’s important that you’re aware of Tennessee’s legal statutes pertaining to this category of litigation.

Types of Bankruptcy Fraud

The most relevant crimes involved in bankruptcy fraud are asset concealment, bribery, and false documentation. The following crimes may all be classified as variations of fraud that might be used in the context of bankruptcy:

  • Filing false documentation, or making false oaths;
  • Hiding assets, properties, and debts;
  • Falsifying records related to finances or estates;
  • Perjury;
  • Falsifying proofs of claims in the eyes of creditors;
  • Withholding information related to property, assets, or debts.

The Bankruptcy Reform Act of 1994 further clarified illegalities related to fraudulence in the realm of bankruptcy. Stipulations within this piece of legislation maintain that schemes intended to defraud another or conceal information for economic gain, by means of the bankruptcy process, are considered crimes.

Common Bankruptcy Fraud Tactics

The most frequently attempted means of committing bankruptcy fraud include, but aren’t limited to:

  1. Bleed-outs: These schemes are performed by insiders in a business, who conduct dealings with the intention of depleting the business’s net worth in order to redirect assets to their own personal gain.
  2. Bust-outs: These schemes involve creating a business with bankruptcy fraud in mind from the get-go. Owners spend time establishing a believably good reputation while conducting minimal transactions and keeping up with credit. Once a reliable reputation is established, enormous orders for products are requested, sold for personal gain, and creditors are fended off until the last possible moment — at which point the owners file for bankruptcy.
  3. Looting: These schemes occur when an unsuccessful company, deep in debt, conceals its condition and sells its assets to a successful business, pre-petition. Most often, looting schemes involve fictitious “successful business” who are really just an extension of the originally failing company (the transaction is performed to please creditors).

Hire Nashville Bankruptcy Attorneys

At Turner Law Offices, P.C., our team of attorneys has years of experience working with clients across a wide range of cases related to bankruptcy, including fraudulence in that area. Whether you’re the victim or potential victim of a bankruptcy fraud scheme, or you’ve been accused of such crimes, we know the most efficient means of pursuing a satisfactory resolution. Call today, or go online to set up your Free Initial Consultation, and meet with a skilled lawyer who’s ready and waiting to get you on track toward the justice you deserve.

(615) 259-2660