Bankruptcy Fraud Statistics
Bankruptcy fraud has become the most common type of fraud in the United States. At the same time, several people misunderstand the meaning of bankruptcy also. The main reason why people are stooping to such low levels, and cheating the financial institutions is the current economy. |
So what exactly is bankruptcy? Bankruptcy is a legally filed status by a person, who does not have any money to meet his financial commitments. The main reason why a person would file bankruptcy is to declare to the financial institutions that he has no money to pay. Usually creditors harass the debtor if they miss the payments. To avoid getting harassed and to stop calls from creditors, a person can file for bankruptcy in the court. Bankruptcy has its effects on the credit report, and it shows on it for nearly 7 years. This means for the next seven years all financial institutions will see you as a risky customer.
In the case of bankruptcy fraud, a person, who has the money files for bankruptcy, will simply transfer all their bank balances and money to other accounts that are not on their name. This could be anyone from the family like parents or cousins. By showing empty accounts, and no assets, a person can file for bankruptcy and also stop creditors from calling them further. However, if a creditor suspects the customer of fraud, they can file for an assessment in the court against them. In legal terms, bankruptcy fraud can be committed through concealment of funds, multiple filings and also petition mills. However, bankruptcy fraud is a federal crime and punishable accordingly.
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