What Is Bankruptcy Fraud?

Filing for bankruptcy is a legal and often life-changing way to get back on your financial feet. It offers a fresh start, but with that opportunity comes the obligation to be completely honest and transparent throughout the process. When someone knowingly provides false information or conceals assets to manipulate the outcome of a bankruptcy case, they may be committing bankruptcy fraud—a serious federal crime with potentially severe consequences.

At Logan A. Weinkauf, P.C. , we help clients across Massachusetts navigate bankruptcy proceedings with integrity and care. In this blog, we’ll explore what bankruptcy fraud means under both federal and Massachusetts law, common examples of fraud, and how to avoid unintentional mistakes that could jeopardize your case.

Defining Bankruptcy Fraud

Bankruptcy fraud is a criminal offense under federal law, specifically under 18 U.S.C. § 157, which applies in all bankruptcy courts, including those in Massachusetts. It occurs when a person knowingly and fraudulently conceals assets, makes false statements, or otherwise tries to deceive the court, creditors, or the bankruptcy trustee.

In most cases, bankruptcy fraud involves intentional dishonesty. This could mean deliberately hiding property, lying under oath, or falsifying documents. Even one false statement in your bankruptcy petition—if made knowingly—could be considered fraudulent.

Common Examples of Bankruptcy Fraud in Massachusetts

Understanding what bankruptcy fraud looks like can help you avoid actions that might be seen as dishonest or deceptive, even unintentionally. Some of the most common examples of bankruptcy fraud include:

Concealing Assets

One of the most frequent forms of fraud is hiding property or money from the court or trustee. This might include:

• Transferring assets to a friend or family member before filing
• Failing to disclose a second bank account or vehicle
• Underreporting income from side gigs or freelance work

All assets must be disclosed, even if you believe they’re exempt. Failing to do so, whether by omission or misrepresentation, is a red flag.

Providing False Information

Submitting inaccurate or incomplete information on your bankruptcy forms is another major issue. This includes:

• Lying about your income, expenses, or debts
• Inflating the value of your liabilities
• Claiming dependents you don’t support

Keep in mind that your bankruptcy filings are made under penalty of perjury. Intentionally providing false information is considered fraud.

Multiple Filings (Bankruptcy Mills)

Some individuals file for bankruptcy repeatedly in different states or under different names to delay foreclosure or collection. This tactic, often referred to as “serial filing,” is a common scheme and can lead to criminal charges.

Bribing a Bankruptcy Trustee

While rare, offering money or gifts to influence a bankruptcy trustee’s decision is a clear-cut case of fraud. Trustees are officers of the court and are required to report any unethical or illegal conduct.

Legal Consequences of Bankruptcy Fraud

Bankruptcy fraud is prosecuted as a federal offense, and convictions can lead to serious consequences, including:

• Up to five years in federal prison
• Fines of up to $250,000
• Denial of the bankruptcy discharge
• Civil lawsuits from creditors

In some cases, even unintentional mistakes can lead to intense scrutiny or penalties, especially if the court believes there was negligence involved.

How to Avoid Bankruptcy Fraud

The best way to steer clear of any legal trouble during bankruptcy is to be completely transparent and honest. Here are some practices to keep in mind:

• Disclose all income, property, and debts—even if you think they’re irrelevant.
• Don’t transfer or “give away” property before filing without first consulting an attorney.
• Double-check your paperwork for accuracy.
• Tell your bankruptcy lawyer everything—omissions can be worse than the truth.
• Avoid quick-fix debt relief schemes or advice from unqualified individuals.

Massachusetts courts, like all bankruptcy courts, operate on the principle of full disclosure. When in doubt, disclose and let your attorney or trustee determine what’s relevant.

How a Massachusetts Bankruptcy Lawyer Can Help

When you work with an experienced bankruptcy attorney, you gain the guidance needed to avoid common pitfalls and ensure that your case is handled correctly from start to finish. At Logan A. Weinkauf, P.C., we take pride in helping our clients file accurate, complete, and fully compliant bankruptcy petitions.

We walk you through every stage of the process—from financial disclosure and exemption planning to court hearings—so you never feel unsure about what to say or do. Most importantly, we protect your interests while helping you understand your obligations, empowering you to move forward with confidence and peace of mind.

If you’re considering bankruptcy in Massachusetts and want to ensure that your case is done right the first time, turn to a lawyer who understands not only the law, but also your need for trustworthy guidance. Contact Logan A. Weinkauf, P.C., today to schedule your confidential consultation.

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