Types Of Bankruptcy Fraud
In the United States people and corporate and businesses can file for four different kinds of bankruptcies under the legal purview. They are Chapters 7, 11, 12 and 13. Chapter 7 and Chapter 13 are more common than the Chapters 11 and 12. The four types of bankruptcies are meant to protect the person who has filed for it from various repercussions. |
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However, people can commit various kinds of fraud under these four different types of bankruptcies using the loop holes.
Bankruptcy fraud is a criminal offence and also is punishable through prison punishment for people who have been caught. Depending on the severity of crime, people are expected to pay huge fines for the fraud. Bankruptcy is a legal process and any fraud is considered illegal. There are three main ways in which anyone would commit a fraud. There are several ideas that people come up with for fraud but they can be categorized into any of these three ways.
They are concealment of assets, petition mills and multiple filings. Under concealment of assets the person or the company does not declare their holdings completely. This is one of the most common types of fraud. They transfer their assets to someone else’s name and make it non traceable.
Multiple filings occur when a person files from different states and list their assets on all the filings. Liquidation cannot happen in such a case.
A petition mill is the biggest kind of fraud where a firm takes a large amount of fees from investors and claim that they are fighting against eviction. Then they still go ahead and file for bankruptcy leaving the debtors credit to be ruined.
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