Many people take on debt when making large purchases, but debt can easily become overwhelming, and often not because someone was overspending. Some people, for example, lose their job, making it hard to meet payments, thus more debt builds up when deadlines are missed and interest builds up. Or, debt can be caused by unexpected medical expenses, leading to many people building up more debt than they could handle in one lifetime. As a result, many people often file for Chapter 7 or Chapter 13 bankruptcy. Chapter 7 bankruptcy is a liquidation process, while Chapter 13 bankruptcy is a refinance plan. While this is a great option for many people who have no way of paying back their debt, there are a few common mistakes when filing for bankruptcy.As a result of a bankruptcy mistake, someone may be accused of fraud. Bankruptcy fraud is the fraudulent act of misrepresenting information during a bankruptcy claim. Here’s how that can happen:
Bankruptcy fraud can happen intentionally or accidentally
One way people commit bankruptcy fraud involves concealing assets during a bankruptcy claim. This may happen by directly misrepresenting the value of certain assets or giving assets to family or friends to hide.Another example of bankruptcy fraud is taking on debt with the intent of filing for bankruptcy. Bankruptcy is supposed to be a relief option for people with too much debt, but some people feel like they can play the system.Finally, bankruptcy fraud can happen accidentally. Bankruptcy fraud often happens as a result of someone not understanding their legal rights and the ramifications of their actions. Despite their mistake, someone filing for bankruptcy may face penalties such as fines or incarceration if they're convicted. If you've been accused of any kind of fraud in a bankruptcy filing, it's wisest to get experienced legal representation right away.