Bankruptcy Fraud and Luxury Items Can Get You in Prison

When dealing with various legal or financial procedures, people are usually too ignorant and don’t pay attention to important moments. Remember that there are always some “interesting” pitfalls that might get you in trouble when forgetting about them. One of these is strictly represented by the act of buying something pretty expensive or luxurious, especially on the money of your creditors, before declaring bankruptcy. Watch out for something like this because, in court, in the long run, you might easily be accused of bankruptcy fraud and even sentenced to prison for several years.

People who are failing to run a business and declare bankruptcy need to understand that creditors have one single goal – to get as much as possible from you. They invested in you; now they want it back, usually ten times fold. Honestly, sometimes if you look at a debt through the prism of the law you realize that they are 100% legit in their actions and the right to collect their money back belongs to them more than ever. However, while being desperate, they do the mistake of accusing honest business owners who experienced some financial difficulties of doing it intentionally and address the court with the charge of bankruptcy fraud against you. Their actions can be qualified as quite aggressive, but if you are a proud and honest citizen of United States you have to ready to face something like this whenever it happens. Remember that people are not guilty of fraud if it really happens that there is no other solution and they simply need to declare bankruptcy. This is something natural; you have simply reached
the situation when you cannot pay your bills.

Nevertheless, not following the legal procedures and actions against such charges from your old creditors can also get you in trouble, that is why being extremely careful is what we recommend doing from the very beginning. Make sure that your steps are as clean as possible and the law is going to be on your side. Charging, buying, acquiring, obtaining something quite pricey or luxury (artwork, apartments, real estate, etc) just before you officially file for bankruptcy without even having the intention to return the money for those products might be interpreted as fraud in the court. When doing stupid things, even your attorney cannot save you, so be ready to face the most annoying difficulties. Remember, that even when dealing with the financial world of the business mind, every action causes a reaction because this is the law of the Universe. Always take into consideration that besides you, creditors also have some rights and one of the primordial ones is to be offered the chance to prove that you committed this federal crime in order to deceive them, take advantage of some goods (sometimes even luxury ones) and simply cause a lot of monetary damage to them and to the government in general. This is where parts of the judiciary department might get involved and believe me; you are going to be in deep trouble…

Do not even think about the possibility of accumulating a huge debt on any products or luxury items that you think are worthy to be purchased before filing for bankruptcy. This would be the biggest mistake that you make, especially in case if you do not have the necessary funds to invest in your attorneys, who will, sooner or later, get you out of this kind of mess. As an example, check this; you guys should realize that the court and the government itself and all its investigators have the right to charge you with bankruptcy fraud even if you make a luxury purchase of $700 USD within 100 days of bankruptcy or even take advantage of a cash advance of more than $900 within the first few several days of bankruptcy. Yes, I know, the figures are pretty low, but believe it or not, you are committing something that you better should not have been done and in the short or long run it will come against you so be aware of this. Remember what we told you about when we have talked about the necessary actions that need t
o be strictly followed and respected before doing something.

In such cases, you, as a debtor, as the person who officially declared bankruptcy and made it public, you are going to have a lot of trouble trying to figure out how to gather the proof against those charges and to convince that court that your intentions were not of committing bankruptcy fraud. Making sure that the court accepts that you totally strive to pay back your creditors is crucial, because otherwise you are saying goodbye to either 250k US dollars or up to five years in the county jail or federal prison, as stated in my previous articles here on this blog. Another aspect that should be mentioned is that there is no exact definition of what a luxury item is after all, but I honestly recommend you guys not to take the chances of purchasing expensive stuff, especially when you are in big financial trouble with your business. If you are a true businessman or women you have to realize that doing something like this would trigger a lot of red flags and you don’t want something like this to happen. However, your attorney should always be somewhere by your side and offer you advice when you experience issues of this kind. In this case, he would better suggest you to wait a few months longer and file the bankruptcy petition later, because the impression of the newly purchased luxury items would be necessary to disappear somehow. Think about it ladies and gentlemen. I’m sure that none of you would like to be dealing with charges of bankruptcy fraud.