What Is Bankruptcy Fraud?

Full Video Transcript

Normally, during a bankruptcy, the debtor is required to provide an accounting of all assets to the court and creditors. This means the debtor should list out everything of value that he or she owns. However, if the debtor wants to keep something, they may consider trying to hide that object or asset. Depending on the assets, this may be known as bankruptcy fraud and might constitute a federal crime. If a person is found to have committed fraud during their bankruptcy filing, they’re usually ordered to pay a fine and may be imprisoned. Whenever you deal with the IRS, it’s best to be completely honest about your assets. The IRS has enormous resources and can investigate cases with overwhelming force.