It is only natural for people facing personal bankruptcy to want to satisfy as many of their debts as possible. While some New York residents may prioritize bank debts, others may choose to satisfy debts to family members and other personal connections in advance of others. However, there are certain rules they must follow in managing their outstanding obligations.
For example, different types of bankruptcy provide different forms of loan elimination. Some forms of personal bankruptcy let a debtor sell off property and use the proceeds to pay off debts. Other forms let debtors reorganize their debts into manageable payments. Once a person files for bankruptcy, he must stick to the terms established by his bankruptcy trustee and the strictures of his chosen form of bankruptcy. There are even rules about debts and creditors that exist in the pre-filing world.
A woman living out of state recently pleaded guilty to bankruptcy fraud. The woman gave large payments to some of her creditors and not others right before she filed for personal bankruptcy. The creditors she paid were family members and the payments totaled more than $10,000.
Her actions were discovered by a bankruptcy trustee familiar with her case. The trustee and others investigated the woman’s financial records and found that she had taken large sums out of her accounts before her bankruptcy filing. Though her actions may have come from an honest place they were barred by the laws of the United States.
The woman now faces probation and fines regardless of whether her actions were intentionally fraudulent. She may have been able to avoid the entire fraud trial if she had known the rules of pre-bankruptcy loan satisfaction. There are many good resources available to people facing overwhelming financial challenges and bankruptcy attorneys can help those people avoid costly mistakes like the one made by the woman in this story.
Source: The Leader-Telegram, “Woman sentenced for bankruptcy fraud,” June 20, 2014