Bankruptcy fraud explained

When applying for bankruptcy it’s important that you provide all the correct information, in full, and co-operate with the official receiver dealing with your case. Failure to do this can lead to serious consequences.

What is bankruptcy fraud?

Bankruptcy fraud occurs when you knowingly lie or fail to mention information about your finances on your application or while your bankruptcy is being processed.

Hiding assets, such as foreign properties or vehicles, is another form of bankruptcy fraud. It could also apply to the debts that you are attempting to clear and whether these were obtained fraudulently.

When you apply for bankruptcy, your financial behaviour is closely inspected by the official receiver – they check everything before the bankruptcy and during. So, it’s a good idea to be aware of what they will be looking for.

Bankruptcy fraud is taken very seriously and, if you are found guilty, you will either have your initial restriction period extended or you could be fined, prosecuted or even sent to prison.

What offences should you be aware of?

It’s important before applying for bankruptcy – and during the process – that you carefully check your finances to ensure you have not committed any of the following bankruptcy offences or carried out fraudulent activity:

  • Knowingly providing the wrong contact details – such as your address.
  • Lying or not including key information about your finances while completing your bankruptcy application, or when discussing your bankruptcy with the official receiver at any point.
  • Leaving the country – England or Wales – with possessions that are worth £500 or more that should be given to the Official Receiver to use as part of your bankruptcy.
  • Selling or even giving away property that you obtained via credit – such as a mortgage – 5 years before you applied for your bankruptcy.
  • Attempting to benefit someone, such as a creditor, by putting them in a better position than they would have been in the bankruptcy. This is known as a preference and can be overturned if this took place at any time up to two years before the bankruptcy.
  • Applying for credit of £500 or more without notifying the assigned Official Receiver.
  • Hiding details of any property you own or are involved with, from the Official Receiver.

When you sign the declaration on your bankruptcy form, you are confirming that everything you have included is correct. If it is later discovered that false information was provided, you will be investigated and prosecuted.  

What will happen if you are found guilty of bankruptcy fraud?

Bankruptcy fraud is a criminal offence and you could be either fined or sent to prison. You will also have a bankruptcy restrictions order placed upon you, which means the restrictions of your bankruptcy will continue for up to 15 years.

What are bankruptcy restrictions?

Bankruptcy restrictions mean you have to follow certain rules when it comes to your everyday finances and work life:

  • You cannot take on a credit product of £500 or more without court permission.
  • You can’t act as an insolvency practitioner or work in certain financial sectors.
  • You cannot set up a new company or act as a director without permission from the court.
  • You can’t set up a business in a different name to the one you were made bankrupt with, without telling people that you have been made bankrupt.

What to do if you think you have committed bankruptcy fraud

If you think you could have committed one of the offences above, then it’s important you speak to a legal advisor immediately. If you can prove that you didn’t intend to defraud or mislead the Official Receiver dealing with your bankruptcy – or the court – then you can defend your case.  

Before you submit your bankruptcy application form, it’s a good idea to have it checked by a financial advisor or someone close to you who is aware of your current financial state. They may be able to spot something you have missed and check for any errors.

If you have any questions about bankruptcy or bankruptcy fraud, our expert team are on hand to answer them. Get in touch via phone or live chat today.

More about bankruptcy