Fraud in Bankruptcy

Bankruptcy fraud

When applying for bankruptcy it’s important that you provide all the correct information, in full, and co-operate with the official receiver dealing with your case. Failure to do this can lead to serious consequences.

What is Bankruptcy Fraud ?

Bankruptcy fraud occurs when you knowingly lie or fail to mention information about your finances on your application or while your bankruptcy is being processed.

Hiding assets, such as foreign properties or vehicles, is also a form of fraud in bankruptcy . It can also apply to the debts that you are attempting to clear and whether these were obtained fraudulently.

The official Receiver investigates your bankruptcy application in detail and checks everything carefully on the bankruptcy application and any further papers submitted during the bankruptcy.

Bankruptcy fraud is taken very seriously and, if you are found guilty, you will either have your bankruptcy discharge period extended from 12 months to anything up to 15 years OR you could be fined, prosecuted, or even sent to prison.

Here are the offences you should be aware of

Check your finances very carefully.  Have a list of all your creditors listed , when the debts arose, how you spent the money and when you stopped using that form of credit. Also, have a list of all your assets with their respective values to hand. If you own property, then it is important to obtain an online valuation of the property and an up to date redemption statement from the mortgage company.

You must not knowingly provide the wrong contact details – such as your address.

Lying or not including key information about your finances while completing your bankruptcy application, or when discussing your bankruptcy with the official receiver at any point.

Leaving the country – England or Wales – with possessions that are worth £500 or more that should be given to the Official Receiver to use as part of your bankruptcy.

Selling or even giving away property that you obtained via credit 5 years before you applied for your bankruptcy. The investigation can go back 2 years with unconnected parties and 5 with connected parties.

Attempting to benefit someone, such as a creditor, by putting them in a better position than they would have been in the bankruptcy. This is known as a preference and can be overturned if this took place at any time up to two years before the bankruptcy.

Applying for credit of £500 or more without notifying the assigned Official Receiver.

Hiding details of any property you own or are involved with, from the Official Receiver.

By signing the bankruptcy declaration, you are confirming that everything you have included is correct. If it is later discovered that false information was provided, you will be investigated and prosecuted.  

Being found guilty of bankruptcy fraud

Bankruptcy fraud is a criminal offence, and you could be either fined or sent to prison. You will also have a bankruptcy restrictions order placed upon you, which means the restrictions of your bankruptcy will continue for up to 15 years.

Bankruptcy restrictions

Bankruptcy restrictions mean you must follow certain rules when it comes to your everyday finances and work life: You cannot :-

take on a credit product of £500 or more without court permission.

You can’t act as an insolvency practitioner or work in certain financial sectors.

You cannot set up a new company or act as a director without permission from the court.

You can’t set up a business in a different name to the one you were made bankrupt with, without telling people that you have been made bankrupt.

What you can do if you suspect that you have committed bankruptcy fraud

Immediately take advice. If you can prove that you didn’t intend to defraud or mislead the Official Receiver dealing with your bankruptcy – or the court – then you can defend your case.  

Before you submit your bankruptcy application form, it’s a good idea to have it checked by an advisor who specialises in bankruptcy legislation  and also by someone who is close to you and is aware of your current financial state. They may be able to spot something you have missed and check for any errors.