Don’t Worry About Bankruptcy Fraud

A lot of readers are concerned about Bankruptcy offences; in fact they’re more concerned about being locked up if they file for bankruptcy. Tre are 40-plus criminal offences under the Bankruptcy Act so it’s small wonder they do. The main reason people are thrown in the the clink is because of Bankruptcy Fraud. So I thought I would briefly explain what Bankruptcy Fraud is.

Bankruptcy Fraud is a crime. Basically it involves concealing assets (think Rene Rivkin), destroying important documents (think Enron), but the most common type of bankruptcy fraud involves obtaining a debt with no intention of repaying it.

If you file for bankruptcy a month or so after obtaining a debt, or if you’ve never made a payment on a debt, you may be looked at by Bankruptcy Regulation. The basic idea is that you should know that you’re not in a good financial position and that you are insolvent (your expenses exceed your income). If you’re insolvent, you won’t be able to pay back the loan, and when you take out a debt you declare that you can repay it. Ipso facto it’s an act of fraud.

Most people don’t take out a loan with the intention of never repaying it so Bankruptcy Fraud shouldn’t be a concern.