Texas residents may not be familiar with a recent case from Illinois, but will no doubt be interested in the results. The couple involved is now facing up to five years in prison after admitting to fraud. They concealed nearly $112,000 from a legal settlement when they applied for bankruptcy.
The couple owed nearly $25,000 to their creditors, and decided that filing for bankruptcy would be a good option for their financial situation. However, at the same they, they repeatedly failed to disclose that the husband was subject to receive $112,000 from a class action lawsuit involving a pharmaceutical product. The fraud from hiding this sizable asset from a U.S. trustee has resulted in much more trouble than the $25,000 they originally owed.
The couple is facing jail time — and up to a $250,000 fine.
Though most families who are in debt are not also simultaneously involved in a class-action lawsuit with a large potential settlement, it is imperative to disclose all possible assets during the bankruptcy process. Obviously as this case shows, the failure to do so is taken serious by the legal system and can result in being in an even worse-off position than before.
Filing for protection under the Bankruptcy Code is meant to provide consumers with a fresh start, not be a punishment. Families who are in need of financial help may want to consider speaking with an experienced bankruptcy attorney to determine if it is the best option for their situation.
Source: The San Francisco Chronicle, “Illinois couple admits bankruptcy fraud,” Dec. 11, 2012