White-Collar Crime

The intent of U.S. bankruptcy law is to protect businesses and individuals from the loss of all their belongings and ability to earn a livelihood due to a financial failure. The number of bankruptcy claims increases every year due mostly to how easy it is to declare bankruptcy. Decades ago filing for bankruptcy was considered an extreme measure, but so many people have declared bankruptcies in more recent years that it is almost commonplace.

The FBI estimates 10 percent of filings are fraudulent. Those filing fraudulent bankruptcies do so to hide assets (items of value owned by a person) and submit false statements and documents. Creditors (businesses or individuals owed money) lose billions of dollars yearly, because successful bankruptcies allow the individuals or businesses who filed to pay only a portion of their debts. This nonpayment impacts both local and national economies.

Another bankruptcy scheme involves foreclosure scams. Foreclosure is a legal proceeding begun by a lender to take possession of property when the owner fails to make payments on his or her loan. Foreclosure scammers pursue individuals who are about to lose their homes in foreclosure. The scammers promise to work with lenders and arrange a plan for the owners to keep their home. Scammers often tell homeowners to send their mortgage payments to them instead of the lender; the scammers then take the money and disappear. The homeowners generally do not realize they have been scammed until it is too late.