A Look Into The World of Bankruptcy Fraud

Fraud is something that is considered to happen to everyone else around you. There are few times in life when fraud will directly affect you and cause problems in your life. In recent years bankruptcy has become more popular and more people are filing for bankruptcy. As with all things when there are more and more people involved the chances for fraudulent activities become higher. The Department of Justice has recognized this trend and has looked into the fraudulent activities. They estimate that there could be as much as ten percent of the activities which are fraudulent. There are many problems with fraudulent behaviors. One problem is that it corrupts the system and can cause those who are supposed to believe in and support the system to be flawed. Further the public opinion can be changed and corrupted on the subject as well as the public losing hope in the individual’s ability to do right and complete a task as requested or thought to be requested. Further there are consequences for those who are really filing a bankruptcy and who are working towards being able to understand these facts. There can even be consequences which can be seen in our taxation system as those who are working voluntary might be less likely to understand the tax system or to participate in the system in a honest manner. Therefore the Department of Justice and the IRS continue to combine efforts to try and detect and challenge bankruptcy fraud.

The IRS is often one of the creditors that is filed against in a bankruptcy case. This can be problematic as there are reasons that the tax system is in place and tax monies go to a number of different areas. Further by following up with these claims the IRS is able to protect a major source of their income and file for follow up proceedings on a number of different bankruptcy claims which are often found to be fraudulent. The IRS even has a separate department of their Criminal Investigation which deals with bankruptcy fraud. This program has three main goals in which they are aiming to lessen the number of individuals who get away with bankruptcy fraud. The first of these goals is to be able to increase the number of people who are in compliance with the tax laws. This means that when someone commits a crime and is fraudulent with their bankruptcy findings that they will be prosecuted to the fullest extent and things will be taken more seriously than they have in the past. The second goal is to make sure that the bankruptcy professionals and practitioners are more strictly monitored by the IRS. This is being done for a couple of different reasons. One reason that this is done is in order to help there to be more compliance in the proper ways to do things and the other reason is to make sure that communication has been established with these individuals. The reason that communication is so important is because it increases the chance that the individual has to report fraud on their own. Finally the third goal is for the IRS Operating Divisions and Criminal Investigation to be able to work together. The hope here is that there will be more compliance if things are more clear and easy to follow.

When looking into the number of people who commit fraud and the number of them that are prosecuted and must serve time in a federal prison the numbers are high. This means that if you have committed bankruptcy fraud and the IRS is investigating you that the chances of you serving jail time are almost a given as nearly everyone who is investigated is found to have committed fraud and has been convicted. Further there are a number of different reasons for which one is able to commit fraud and the investigations into these different reasons and practices of fraud can give the individual a number of reasons to follow through with things and avoid committing bankruptcy fraud on all accounts. There are a number of different ways in which might commit bankruptcy fraud. These include that the individual might try to conceal or hide some of the assets. Although it might be tempting to try to hide assets in order to make your need seem greater there are great consequences in doing so.

There are a number of ways that bankruptcy fraud is typically committed. One way is that there are times when someone might not be 100% accurate and truthful on their bankruptcy application. This is something that should be avoided at all costs as it is important for the individual to be honest. A second way that is common is when someone attempts to conceal some of their assets in an attempt to hide them from the court. Another way in which one might act fraudulently is an illegal transfer of money where they are giving money away to family and friends with the purpose of getting the money back from them but being able to conceal it and keep it from being additional income on their bankruptcy statements. If you are going to place property or other high dollar assets in someone else’s name in order to try and keep them from the court then you would be committing fraud as well. Another fraudulent activity is when someone does not report an inheritance, rental income, income from a second job or jobs that are worked under the table or any other income that might be coming in. Further it is illegal to file in more than one state for bankruptcy during the seven year period. You must also be honest about your marital status on the bankruptcy forms and in all information and you must only give your name and social security number. It is highly illegal to use a false identity to continue to be able to run up debt and not to have problems while you are going through a bankruptcy.