Bankruptcy
Bankruptcy Fraud
What is Bankruptcy?
Bankruptcy is a way for individuals or businesses to satisfy debts. There are four types of bankruptcy. There is Chapter 7 which is a complete liquidation for individuals. Chapter 7 bankruptcy liquidates assets that are not exempt and uses the proceeds to pay creditors. In this bankruptcy creditors may be paid in full or a percentage based on the assets that were available. There is Chapter 11 which is for a business. Chapter 11 allows a business to reorganize its operation and finances so that it can pay its creditors. Sometimes in Chapter 11 another entity may take over the original entity in the reorganization. Creditors are told to give the entity time to reorganize and pay the debts. Then, there is Chapter 13 which is reorganization for individuals. Chapter 13 gives individuals a chance to pay creditors over 3 to 5 years through a Bankruptcy Trustee. Most assets can be kept depending on what percentage of the debts will be paid. If the debtor is paying the creditors in full then they would be able to keep all of their assets. This is only available for debtors with verifiable disposable income. The last type is Chapter 12 which is for farmers and fishermen (LII / Legal Information Institute). After completion of whichever chapter used, the creditor gets a “fresh start”.
White Collar Crime
Why is this considered white collar crime? Although there are people in blue collar positions that file bankruptcy, they usually don’t have many assets to hide. People in white collar positions, when they get in to a bind and have to file bankruptcy, they tend to do what they need to do so that they don’t lose all of their assets. “The bankruptcy system is designed to give individuals and companies a chance to reorganize their affairs or to equitably distribute the non-exempt assets of the debtor among the creditors if reorganization is not possible” (FBI). Because of the thought of the distribution of their non-exempt assets,
What is Bankruptcy?
Bankruptcy is a way for individuals or businesses to satisfy debts. There are four types of bankruptcy. There is Chapter 7 which is a complete liquidation for individuals. Chapter 7 bankruptcy liquidates assets that are not exempt and uses the proceeds to pay creditors. In this bankruptcy creditors may be paid in full or a percentage based on the assets that were available. There is Chapter 11 which is for a business. Chapter 11 allows a business to reorganize its operation and finances so that it can pay its creditors. Sometimes in Chapter 11 another entity may take over the original entity in the reorganization. Creditors are told to give the entity time to reorganize and pay the debts. Then, there is Chapter 13 which is reorganization for individuals. Chapter 13 gives individuals a chance to pay creditors over 3 to 5 years through a Bankruptcy Trustee. Most assets can be kept depending on what percentage of the debts will be paid. If the debtor is paying the creditors in full then they would be able to keep all of their assets. This is only available for debtors with verifiable disposable income. The last type is Chapter 12 which is for farmers and fishermen (LII / Legal Information Institute). After completion of whichever chapter used, the creditor gets a “fresh start”.
White Collar Crime
Why is this considered white collar crime? Although there are people in blue collar positions that file bankruptcy, they usually don’t have many assets to hide. People in white collar positions, when they get in to a bind and have to file bankruptcy, they tend to do what they need to do so that they don’t lose all of their assets. “The bankruptcy system is designed to give individuals and companies a chance to reorganize their affairs or to equitably distribute the non-exempt assets of the debtor among the creditors if reorganization is not possible” (FBI). Because of the thought of the distribution of their non-exempt assets,
References: Albrecht, Albrecht, Albrecht and Zimbelman (2009). Fraud Examination 3rd Ed. Chapter 16, South-Western, Mason OH. LII / Legal Information Institute, Bankruptcy: an Overview, retrieved October 13, 2009 from the Worldwide Web: http://topics.law.cornell.edu/wex/bankruptcy. The Lawyershop, Bankruptcy Fraud, retrieved from the Worldwide Web: http://www.lawyershop.com/practice-areas/criminal-law/white-color-crimes/bankruptcy-fraud/. U.S. Department of Justice (2009), United States Attorney Southern District of Mississippi, Couple Pleads Guilty to Mail Fraud, Bankruptcy Fraud and Falsifying Documents in Bankruptcy Cases, retrieved October 13, 2009 from the Worldwide Web: http://www.usdoj.gov/ust/r05/pdfs/pr20090821.pdf. FBI, White-collar Crime, Bankruptcy Fraud: Overview, retrieved October 14, 2009 from the Worldwide Web: http://www.fbi.gov/whitecollarcrime/bankruptcy_fraud/about.htm. Find Law, The New Bankruptcy Law: Changes to Chapters 7 and 13, retrieved October 14, 2009 from the Worldwide Web: http://bankruptcy.findlaw.com/new-bankruptcy-law/new-bankruptcy-law-basics/big-changes.html. IRS.gov, Bankruptcy Fraud - Criminal Investigation (CI), retrieved October 14, 2009 from the Worldwide Web: http://www.irs.gov/compliance/enforcement/article/0,,id=117520,00.html. IRS.gov, Examples of Bankruptcy Fraud Investigations FY2008, retrieved October 14, 2009 from the Worldwide Web: http://www.irs.gov/compliance/enforcement/article/0,,id=174629,00.html.