Monday, November 19, 2012

Can I Go To Jail For Filing Bankruptcy?

File bankruptcy and go to jail? I know what you are thinking, “You kidding, right?”.  Whenever you ask someone about this, you hear there is no way you could end up in jail; after all, there is no Debtor's Prison in the United States.  

Well, the simple filing of the bankruptcy is not what can put one in jail, however, the circumstances surrounding the filing could. For example, if you make a false statement on the papers filed with the court which are signed under penalty of perjury (which is almost everything that is filed), one of the penalties for doing so in bankruptcy is not only having the case dismissed, but referred to the U.S. Attorney for prosecution. That's right, this becomes a criminal offense.

Next, you are probably thinking this never happens. If it did, then you would have heard about it, right?

Well, think again. The following is a short article of a high profile case involving bankruptcy fraud:

Federal prosecutors in Los Angeles are asking that former All-Star outfielder Lenny Dykstra serve a 2½-year prison sentence for pleading guilty to bankruptcy fraud and money laundering.
Prosecutors said in court documents filed Thursday that a 30-month sentence is appropriate for Dykstra because he has acted as if he was above the law for years.
Dykstra could face 20 years in prison after pleading guilty in July to charges that he hid and sold sports memorabilia and other items which were supposed to be part of his bankruptcy filing.
Dykstra is currently serving a three-year prison sentence after pleading no contest to grand theft auto and providing a false financial statement.
He is scheduled to be sentenced Dec. 3.


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