Bankruptcy Fraud in Atlanta, Georgia: What You Need to Know

For most debtors who file bankruptcy in Atlanta, Georgia, it is unlikely that they will have any issues with bankruptcy fraud. However, bankruptcy fraud is a serious matter and can lead to criminal prosecution.

When a debtor files Chapter 7 or Chapter 13 in Georgia, he must list all assets on the bankruptcy petition. The bankruptcy filing includes signatures for debtors stating that they swear that the list of assets is accurate under penalty of perjury. While that seems scary, most debtors do not have property that is valuable enough to hide from the bankruptcy trustee; thus, it is better to list all assets and use the available Georgia exemptions to protect property in bankruptcy, rather than not list the assets at all.

If you fail to list valuable items on your bankruptcy petition and your bankruptcy trustee makes the discovery, the trustee will refer your case to the U.S. Attorney, who can then choose to file criminal charges against you.

As a bankruptcy attorney, I understand that some bankruptcy filers experience financial circumstances that were unfair and out of their control and, as such, may be tempted to do things like fail to valuable assets because “no one will ever find out.” While it is probably true that bankruptcy trustees generally do not have the resources to thoroughly investigate every debtor, I caution any bankruptcy filer not to take the risk.
First, an intentional failure to disclose assets is illegal and constitutes a crime under federal law.

Second, you have no way of knowing if the United States trustee will select your case for a random review, which will mean a much more intrusive scrutiny than usual.

Third, there is the risk that a third party – often an ex-wife or ex-business partner – might anonymously write the U.S. Trustee to report intentional errors on your bankruptcy petition. Believe it or not, this sometimes actually happens.

For example, the Los Angeles Times recently reported that former Major League Baseball star Lenny Dykstra had been charged with selling personal and household items at a consignment store while in the midst of his bankruptcy. According to federal prosecutors, Dykstra was spotted selling sports memorabilia and other items from his Ventura County mansion, including a $50,000 sink, depriving the estate of a combined $400,000 of assets. Dykstra helped the New York Mets win the 1986 World Series. Now he has been charged with one count of embezzling from a bankruptcy estate.

Decisions made during the course of a bankruptcy filing are important ones. If you are considering filing for bankruptcy in Atlanta, Georgia, please contact the Law Offices of Charles Clapp at (404) 585-0040 or for a free initial consultation.