Disclosure

• Underlying the bankruptcy fraud laws is the legal obligation of a debtor to fully and accurately disclose all of her assets, debts, liabilities and income.
  
  

Hidden Assests

• A relatively common problem in bankruptcy is a debtor's concealing assets. Hiding assets is at the heart of many bankruptcy fraud allegations.
  
  

Preferential Creditor Treatment

• A debtor may give preferential treatment to a creditor, a basis for fraud. For example, a consumer pays off a credit card directly before filing, does not report the card and continues to use it.
  
  

Dismissal

• A typical penalty for bankruptcy fraud is a dismissal of the debtor's case with a prohibition on refiling within a set period of time.
  
  

Fines

• Under bankruptcy laws, fines are imposed for fraud in a bankruptcy case.
  
  

Criminal Prosecution

• The ultimate penalty for bankruptcy fraud is criminal prosecution of a debtor, with a potential for incarceration.