Alleged Fraud in Bankruptcy Case Highlights Importance of Honesty and Transparency

Posted on in Personal Bankruptcy

Illinois chapter 7 attorney, Illinois chapter 11 attorneyMost people who file bankruptcy really do need help. Likely drowning in debt for months, sometimes because of events they could not have prevented or predicted, they just need a chance to breathe again. Bankruptcy – be it chapter 7 bankruptcy or chapter 11 – may provide such relief (at a cost). There are, however, those who attempt to scam the system. An Illinois woman and former gym owner is being accused of doing the latter.

Bankruptcy Petition Shows Tax Obligations and Income-Debt Disparity

Filed in 2014, the former gym owner’s bankruptcy petition indicated a major disparity between assets and liabilities ($276,440 and $5.6 million, respectively). Income, which was said to include Social Security and unemployment benefits, was said to be $3,640 and monthly expenses were said to fall at $5,125. In addition, the Illinois woman indicated she owed $27,000 to the Illinois Department of Revenue and had a federal tax lien from the Internal Revenue Service (IRS) in the amount of $93,538. In short, the information disclosed supported the need for bankruptcy.

Gym Owner Allegedly Fails to Disclose Suspicious Loans

Court documents filed by the bankruptcy trustee indicate that the gym owner was not completely honest about her financial situation. Accused of receiving more than $8,500 in direct payments from the gym, along with two indirect loans, the woman is now facing claims of fraud. One of those loans, which was said to be in the amount of $15,000, was allegedly sent to the person who was supposed to buy the gym but never did. The second alleged loan is more confusing, has no documents, and is said to be from the same company that lent the first sum of money.

Potential Consequences Serve as a Cautionary Tale

In the recently filed petition, the bankruptcy trustee argued that the former gym owner should not be discharged from bankruptcy. This could carry with it a number of financial consequences, including full reassignment of the debt and any accrued interest charges. The woman may also be at risk for criminal charges or penalty fees for committing fraud if the courts determine there is enough evidence.

In short, lying or hiding information during a bankruptcy case simply is not worth the risk. Nor is attempting to navigate the process alone. Instead, contact the Law Offices of Eric Zelazny. An experienced Tinley Park bankruptcy attorney and CPA, he can provide the knowledge needed to ensure your bankruptcy is filed according to the law. In some cases, he may even be able to help you carve out an alternative path. To schedule your free initial consultation, call 708-888-2299 today.

 

Sources:

http://illinoistimes.com/article-17045-fraud-alleged-in-bankruptcy.html#/

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