Criminal Bankruptcy Law and Legal Definition

Criminal bankruptcy or bankruptcy fraud refers to the offence of knowingly and fraudulently doing any of proscribed acts like concealing assets or destroying, withholding, or falsifying documents in an effort to defeat bankruptcy-code provisions. It is the illegal exploitation of the bankruptcy system in favor of one’s personal gains. 18 USCA § 152 makes such activities a federal offense carrying a sentence of up to five years in prison, a fine of up to $250,000, or both.

This while collar crime takes four general forms. It can be by concealment of assets where the debtors conceal assets to avoid having to forfeit them. This is most commonly resorted method. Secondly individuals intentionally file false or incomplete forms. . They submit incomplete lists of their assets, in an attempt to avoid liquidation of those assets. Third, individuals file multiple times for bankruptcy in several states using either the same name and information or aliases and fake information, or some combination thereof. Fourth, a person bribes a court-appointed trustee. Commonly these forms of fraud are coupled with other crimes such as identity theft, mortgage fraud, money laundering or public corruption.

This is also termed as bankruptcy crime.