This article continues our series of posts on possible bars to filing for bankruptcy under Chapter 7. Recall that in previous posts we examined bars based on receiving either an earlier discharge of your debts or an earlier dismissal of your case. Here we'll look at another ground for possible disqualification: fraudulent conduct.
Debtors can commit fraud on their creditors or the court. Here we'll look at fraudulent conduct vis-à-vis creditors.
Basically all fraudulent action in this context boils down to trying to conceal your assets. This is what you don't want to do. The following are some actions which will alert the court that fraud may be afoot:
1) Giving away property to family or friends in the time leading up to filing;
2) Buying big-ticket items when don't you have the resources to pay for them;
3) Hiding assets from your spouse while going through a divorce.
All these actions will raise red flags with the court. Remember, bankruptcy is designed to help out honest people who unfortunately fell into a hole. Any action that smells of fraud will diminish your chances of obtaining a discharge of your debts.
In tomorrow's post we'll examine what fraud upon the bankruptcy court looks like.
If you have questions pertaining to bankruptcy, I offer free consultations at my offices in Walnut Creek, Fairfield, and Sacramento.
