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Collegestudent19's avatar

What would happen if someone were to lie on a Ch. 7 Bankruptcy form(s)

Asked by Collegestudent19 (20points) February 9th, 2011

A close family member of mine is planning on declaring bankruptcy in New Jersey, however she doesn’t make what someone would call a modest salary. Even though her debt ratio is 98%, she still may have to perform a “means test” because the money she makes pre-tax is more then the median household for 3 people in NJ. If she were to lie and say that a fourth person lived in her household then it would push the median up to 104k, making it so she wouldn’t have to take the “means” test. I could see how this could be considered illegal but has anyone ever contemplated on, or know someone that has done this? And if you know any advice in bankruptcy law in NJ it would be greatly appreciated!

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8 Answers

jaytkay's avatar

Hi @Collegestudent19, welcome to Fluther!

Lying to the court is not merely “considered” illegal. And Federal courts handle bankruptcy, not state courts. If the ethics don’t deter enough, keep in mind that Federal prosecutors have a lot more resources than state and local authorities.

YARNLADY's avatar

I’m pretty sure they require names, birth dates and SS# of all people being claimed. You can’t claim your dog or your favorite ivy plant.

Tropical_Willie's avatar

Fraud in Federal Court context may lead to “twenty years in jail and up to two hundred and fifty thousand dollars in fines”.
You know where they will be for a LONG time, by the by if you report the fraud you can collect 15% of the money.

bkcunningham's avatar

In New Jersey part of the paperwork you must provide when filing bankruptcy is your two most recent income tax returns. I would imagine it would be a red flag to any attorney who sees an additional deduction like a person added.

You also must complete a credit counseling session with an approved nonprofit
budget and credit counseling agency. I would imagine the added person wouldn’t be on this form either unless you lied to the credit counselor.

Bankruptcy fraud can lead to the petition being dismissed and/or criminal prosecution. Bankruptcy fraud charges are investigated by the Internal Revenue Service and are then sent to the Department of Justice for the actual prosecution. Jail time is up to five years, significant fines and fees and restitution.

Adirondackwannabe's avatar

Is she a total idiot? I’m serious. Only a total idiot would even consider this idea for more than one second. You’re messing with a criminal record for the rest of your life. Because she can’t control her finances? Try keeping that well paying job with a conviction.

Response moderated (Off-Topic)
iamthemob's avatar

I would reprimand @Adirondackwannabe for being so blunt were s/he not totally right. This needs to be put bluntly (but only in regards to the filing, not about how she should run her life ;-)).

A Chapter 7 filing consists of document that are the equivalent of sworn testimony. This means that all statements must be true to the best of the filer’s knowledge. If she includes false information, especially knowingly, it is the equivalent of perjury, and could result in both criminal and civil penalties.

I’m a lawyer, and I’ve specialized in bankruptcy (although on the corporate restructuring level). I say that not because this is legal advice, or to back up my statement. I include the information only to discard it as completely irrelevant because whether I’m a lawyer doesn’t matter in answering this question. The fact that lying in a document submitted to the court is an incredibly bad idea is something that, as @Adirondackwannabe put it, really even a “total idiot” should know.

perspicacious's avatar

You don’t want to commit fraud in a Federal proceeding. the trustee could come and take away anything you own. The fruad would be sent to the U.S. Attorney for prosecution of bankruptcy crimes and you will go to prison. When you get out of prison you will be paying fines for the rest of your life. Don’t even think about it.

We live in a country that provides a bankruptcy system rather than just throwing people in debtors court. For someone to not be honest in a bankruptcy proceeding makes me angry and I would hope they would be caught every time.

This is my personal opinion—not legal advice.

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