Bankruptcy is one of the best features of U.S. law. It allows people to wipe the slate clean and start over again. Prior to the development of bankruptcy, countries used measures like workhouses and debtors’ prisons to punish people who had lost everything. Of course, people have to be honest for the system to work. Any Ohio resident considering filing for bankruptcy needs to understand what constitutes bankruptcy fraud and what is considered acting in good faith.
Assets and fraud
Depending on the type of bankruptcy someone declares, they may need to face giving up some of their assets. Chapter 13 involves what’s known as a wage earner’s plan. When someone files under Chapter 13, they’re agreeing to make payments to their creditors over time. Chapter 7 is different. Under Chapter 7, people who file for bankruptcy may need to liquidate their non-exempt assets, a process that is handled by the trustee.
It can be hard to face liquidation. People may even need to give up their family heirlooms. They can be tempted to take steps to hide some assets, or give them away until they’re out of bankruptcy. However, doing that would be fraud in the eyes of the law. Fraud can be a serious white-collar crime, and it involves deliberate dishonesty.
Bankruptcy fraud can also be perpetrated by unscrupulous businesses. If you’re in danger of losing your home, be very wary of any company that tells you they can help you keep it. Sometimes, they collect fees from people but then actually file for bankruptcy in your name. They may not even let the distressed homeowners know they have filed.
If you’re underwater and unclear on what to do, it’s prudent to contact an attorney. A lawyer’s job is to advocate for you and give you solid advice. A lawyer may be able to help you understand what to do to keep your home. For some people, Chapter 13 may be an available option. For others, different avenues may be more appropriate.