What is bankruptcy fraud? | White-collar crime examples

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White-collar crimes are financial crimes. Bankruptcy fraud is one of the examples of white-collar crimes. The article talks about what bankruptcy fraud is.

White-collar crime examples and What bankruptcy fraud is? 

White-collar crime is a type of non-violent crime. Here, the main motive is usually financial. White-collar criminals typically hold a professional role of authority. They have a status, as well as a position that pays much more than average.

White-collar crime examples include:

  • Embezzlement

  • Corporate Fraud

  • Ponzi scheme

  • Extortion

  • Bankruptcy fraud


Read more about white-collar crime examples.

What is bankruptcy fraud?

Filing for bankruptcy can provide help to people who are struggling financially. But, due to it, creditors can only get a part of the debtor’s non-essential property. (or assets not crucial in a household and a work).

Many filers conceal assets while filing bankruptcy papers. As a result, the law charges them with bankruptcy fraud. Bankruptcy fraud is one of the white-collar crime examples.

What are bankruptcy fraud types?

There are two types of bankruptcy frauds.

  • Civil bankruptcy fraud

Although civil bankruptcy fraud is not a crime, it can still have profound impacts. Although civil bankruptcy fraud is not a crime, it can still have serious consequences. 

For instance, neglecting to mention a creditor is not a bankruptcy fraud. At the same time, the law regards deleting a creditor intentionally as civil fraud.

In general, the person must execute a fraud for sticking charge. Civil fraud penalties vary based on the details of the case.

For example, the law can cancel the filer’s exemptions. It is vital because after losing the legal status assets are a part of bankruptcy property. Then, the trustee can sell the property and make payment to the creditors.

  • Criminal bankruptcy fraud

Criminal bankruptcy fraud is a more severe crime that can lead to imprisonment.

It Includes,

  • To avoid losing assets, a debtor hides them. The person can fake about the transfer or sale of assets.

  • An individual submits incorrect or incomplete papers on purpose. Giving incorrect details on a bankruptcy form is also Perjury.

  • A person submits several times, using either fake or accurate information, in various states.

  • Paying a bribe to the court-appointed trustee.

The details of the case decide whether the bankruptcy fraud is civil or criminal. The motive of the filer is also crucial. It’s because there’s a difference between forgetting to reveal an asset by mistake and willfully hiding the asset transfer. The court will also check the transferred asset’s value. 

What is the bankruptcy fraud penalty?

  • If a person is guilty of bankruptcy fraud, they have to face a punishment of 5 years in prison. He or she also has to pay a non-dischargeable penalty of up to $250,000.
  • Suppose there are more crimes involved in the case, like perjury. Every perjury also has to face a jail term of at most five years. It also has a non-dischargeable fine of $250,000.
  • As a result, the law considers any action that is against bankruptcy law as a separate charge.

Effects of the bankruptcy fraud penalty

If the court charges you with bankruptcy fraud, you will have to face serious effects even if you do not spend time in prison. 

  • Some states don’t let criminals have guns.
  • When you serve in jail or on probation, the U.S. government will seize your passport.
  • Other countries also don’t let criminals enter.
  • The law also cancels their Visa and even expels permanent residents.
  • Due to criminal records, you will lose parental rights. No employer will hire you.
  • The government will also reject the benefits they provide, e.g., food stamps, public housing, etc. 


Want to know more about what is bankruptcy fraud? Click here.


What is Bankruptcy fraud? It is a white-collar crime. White-collar crime is a type of non-violent crime where the main motive is usually financial. Criminal bankruptcy fraud is a more severe crime that can lead to imprisonment—bankruptcy fraud penalty five years in prison and a non-dischargeable fine of up to $250,000. If more crimes are involved in the case, like perjury, every perjury also has to face a jail term of at least five years.

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