Got fraud? If you find yourself being accused of a fraud on the bankruptcy court like Jennifer MckMama McKinney (i.e. falsified, misleading, destroying, manipulating, etc.), what can you do? If you could turn back the hands of time, I would tell you to be honest and fully disclose everything in your bankruptcy filing.
But once the wheels of fraud are in motion, it’s awfully hard to stop them.
One of the techniques used by debtors trying to save their skin after red flags of fraud have been uncovered by the bankruptcy trustee is an attempt to dismiss the bankruptcy case. This move makes little difference in a case of suspected fraud. The bankruptcy is likely going to be denied anyway, so asking to have the bankruptcy dismissed does not get the debtor ahead. And a debtor can’t just automatically get a bankruptcy dismissed. The judge decides whether the bankruptcy can be dismissed.
In a case involving fraud, the court will likely not approve the dismissal. First, the court will want to sell assets that already belong to the bankruptcy estate and give the proceeds to creditors. Second, the court will prefer to have the discharge denied so the debts can never be discharged in bankruptcy in the future.
Maybe the dismissal will stop the bankruptcy trustee from continuing to look into the suspected fraud? No. If the trustee has already uncovered substantial evidence pointing to fraud, don’t expect that he’s going to stop looking into the matter simply because you’re trying to make the bankruptcy case go away.
If you have found yourself lying about your income and your assets in your bankruptcy, don’t think your problems are over once you’re told your debts will not be discharged (ever!) and you will spend the rest of your life paying them off. Your next visit may be from an IRS auditor (or maybe even a criminal investigator!), who will want to thoroughly audit your books and records to see if you have committed tax fraud.
Long story short: Once you’ve attempted to deceive and defraud in the bankruptcy process, there is little hope for getting yourself out of trouble. When you attempt to commit fraud in the United States Bankruptcy Court, it seems like the fun never stops!!!
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