Bankruptcy Fraud

Bankruptcy Fraud

By

April K. Templeton

University of the Cumberlands

Introduction

In the free nation of our United States where citizens are afforded at least one second chance, it would be nice if all those needing a fresh start were people of integrity and truth. When others are willing to forgive so much, I find it to be a shame that such forgiveness would be abused and sought through dishonest means. In the essay that follows, I will explore the topic of bankruptcy fraud including a list of fraud warning signs, types of bankruptcy fraud schemes, and statistics as well as real-life examples of fraudulent bankruptcy debtors.

What is bankruptcy?

According to Twomey & Jennings (2011), bankruptcy is “a statutory proceeding with detailed procedures and requirements” (p. 794). Bankruptcy is offered to those that have gotten in over their head, so to speak, in debt. It allows people “who can no longer pay their creditors get a fresh start” (Administrative Office of the U.S. Courts 2011). The U.S. Courts website states that the primary goals of bankruptcy laws are twofold. First, the laws “give an honest debtor a ‘fresh start’ in life by relieving the debtor of most debts.” Secondly, bankruptcy provides opportunity to “to repay creditors in an orderly manner to the extent that the debtor has property available for payment” (2011). Bankruptcy is not only available to individuals, but also to businesses and corporations. In some instances filing for bankruptcy “allows a debtor to reorganize and establish a plan to repay creditors, while other cases involve liquidation of the debtor’s property” (Administrative Office of the U.S. Courts 2011). Information provided by Twomey & Jennings (2011) informs that “jurisdiction over bankruptcy proceedings is vested in the federal district courts (p. 794).

Types of Bankruptcy

While there are multiple categories of bankruptcy under which one can file, I will highlight the three most commonly...