The United States Trustees Office has a variety of methods to investigate debtors for possible fraud. They can examine the documents you submitted or even compel an oral examination. Debtor’s affairs are carefully investigated by trustees or creditors’ committees who have broad authority to conduct such investigations.
Federal Bankruptcy Rule 2004 provides that the Bankruptcy Court may order the examination of any entity or person. With Rule 2004 examinations, and adversary proceedings, the USTs can help AUSAs by identifying conflicting and false statements made under oath. If a Rule 2004 examination is ordered by Court and debtors fail to appear or submit documents, sanctions will follow.
If you or someone you know is the subjection of an investigation during a bankruptcy process, you must not take it lightly. For if fraud is found, you may face criminal charges. Riviere Advocacy Group LLC works with our own team of experts and investigators, to counter the government’s investigation, and build your best possible defense.
Criminal statutes that apply to bankruptcy fraud are 18 U.S.C. Section 152 that specifically prohibits knowingly and fraudulently (1) concealing property of the estate; (2) making a false oath or account; (3) making a false declaration, verification or statement under penalty of perjury; (4) presenting or using a false proof of claim against a debtor estate; (5) receiving, post-petition, a material amount of property from a debtor with intent to defeat the provisions of the Bankruptcy Code; (6) offering, receiving, or attempting to obtain consideration for acting or refraining from acting in a case under the Bankruptcy Code; (7) transferring or concealing property in contemplation of a bankruptcy case or with intent to defeat the provisions of the Bankruptcy Code; (8) post-petition concealment or alteration of records; and (9) post-petition withholding of a debtor’s records.
The statute applies to anyone who commits any of the above including debtors, creditors, fiduciaries and anyone else.
Section 153 of Title 18 makes it a crime for anyone to appropriate to their own use, embezzle, spend, or transfer any property belonging to a debtor’s estate, and any actions of the same ”persons” if they secret or destroy any document belonging to a debtor’s estate.
Section 155 of title 18 prohibits knowing and fraudulent agreements that are aimed at fixing compensation in bankruptcy cases.
Section 157 of Title 18 is actually entitled ”Bankruptcy Fraud” prohibits a person from (1) filing a bankruptcy petition; (2) filing a document in a bankruptcy case or proceeding; or (3) making a false or fraudulent representation, claim, or promise concerning or in relation to a prepetition or pending bankruptcy case or proceeding (or a proceeding falsely asserted to be pending) if these acts are done as part of the scheme to defraud.
Other bankruptcy fraud criminal charges may include tampering with or falsifying records (18 U.S.C. Section 1519)
On or about the _____day of _____ , in the _______District of____________, JOHN DOE, defendant herein, did in this district and elsewhere knowingly and fraudulently conceal property belonging to ABC INC., Bankruptcy Case No. ______ , specifically two automobiles, ________, etc., from the trustee charged with control of the debtor’s property and from the creditors and the United States Trustee.
All in violation of 18 U.S.C. §§ 152 and 2
If you are an individual or a sole proprietor, you can file a Chapter 13 bankruptcy to pay off all or part of your debts over three to five years. Rather than wiping out debts immediately, this option allows you to reorganize them so you have time to pay.
Many people who file Chapter 13 bankruptcies have:
- Mortgages or other loans they would like to bring current, so they do not lose their homes or other property
- Taxes, child support or student loans that can’t be wiped out by Chapter 7 bankruptcy
- Moral convictions that debts should be paid no matter how long it takes
For a Chapter 13 bankruptcy, you will need a stable income with disposable income (income left over after you pay the bare necessities of life such as shelter, food and utilities). This is why it is often referred to as “wage earners” bankruptcy; you must have wages (income) to keep the plan viable. You must have no more than $1,081,400 in secured debt (debt involving property that your creditor might take if you do not make your payments) and $360,475 in unsecured debt.
The filing of the Chapter 13 petition must be accompanied by a proposed payment plan extending over three to five years. The proposed payment plan must provide for the payment of all “priority claims,” such as taxes, in full.
The bankruptcy trustee appointed by the Bankruptcy Court must review the proposed plan for accuracy and flexibility. The proposed plan is distributed to creditors, who have the right to object to the plan if it is unreasonable. If the plan is approved, you can keep all your assets during the period of the plan. You make monthly payments to the bankruptcy trustee, who distributes the funds to the creditors according to the plan. If the plan is completed as approved, your unpaid debts are “discharged.” If you do not complete the repayment plan as approved, you will have several other alternatives which I can explain to you.
The discharge in a chapter 13 case is somewhat broader than in a chapter 7 case. Debts dischargeable in a chapter 13, but not in chapter 7, include debts for willful and malicious injury to property (as opposed to a person), debts incurred to pay nondischargeable tax obligations, and debts arising from property settlements in divorce or separation proceedings. 11 U.S.C. 1328(a).
If you can’t keep the plan that was formulated, there are still options open.
A debtor in a chapter 13 case has the right to automatically convert the case to chapter 7 at any time. This is done by filing a Request for Conversion form with the Clerk’s Office. Once the case has been converted to chapter 7 the debtor no longer has to continue making chapter 13 plan payments. The debtor can obtain a discharge of his/her dischargeable debt in the chapter 7.
An example of a situation in which someone might do this is if they had filed chapter 13 for a very specific reason, such as to try to catch up on car loan payments or home mortgage payments to prevent loss of the car or foreclosure, but they weren’t able to successfully make the required catch up payments and lost the car or house. In that situation it may not make sense to continue to be in chapter 13 and conversion to chapter 7 may make more sense.
A debtor in a chapter 13 case has the right to voluntarily dismiss his or her case at any time. Individuals who file chapter 13 to try to catch up with payments on a car loan, home mortgage or apartment lease often will seek to dismiss their cases once they have caught up with payments. Some individuals decide they no longer want to be in chapter 13 repayment plan.
By voluntarily dismissing a chapter 13 case the debtor is no longer bound by the chapter 13 plan and no longer required to make monthly plan payments Of course, a debtor who dismisses a chapter 13 before making all payments required under the plan will not receive a discharge.
Another option for a debtor who is unable to make chapter 13 plan payments is to amend the chapter 13 plan to adjust the payment schedule to either reduce the monthly plan payments or extend the length of a plan (not longer than 5 years total from time of 1st payment). In some situations a debtor may need to adjust the monthly play payments to reflect changes in income, such as reduced wages resulting from reduced working hours.
In those situations the debtor can apply to the bankruptcy court to amend the chapter 13 plan to reflect his/her decreased income by reducing the monthly plan payments. Amendment of a chapter 13 plan requires a motion to amend the plan brought on notice to the chapter 13 trustee and all creditors.
