Bankruptcy Abuse Prevention & Consumer Protection Act of 2005
(In 2005) the United States Congress acted and President George W. Bush signed into law a legislation that vastly changes the laws of bankruptcy as they pertain to individuals. This law will go into effect on October 17, 2005 and drastically change the historical American version of bankruptcy, in that creditors will be treated much more favorably than debtors. Some of the more significant (and controversial) changes include:
The legislation sponsored (introduced) by the chairman of the Finance Committee Republican Senator Chuck Grassley of Iowa was supported by President George W. Bush and opposed by many Democrats and the Green Party. Although the original legislation was introduced during the Clinton Administration and had more bi-partisan Congressional support at the time the president vetoed it nonetheless. The bill languished for years due to disagreements in Congress as to the level of the means test and whether anti-abortion groups could use bankruptcy to discharge fines levied against them by courts for actions that resulted in property damage or injury such as bombing abortion clinics.
Bankruptcy Fraud is a business crime of filing for bankruptcy with criminal intent that is with the intention of evading payment for goods even though the buyer has funds that could be used to pay for them or accepting payment for goods or services but not supplying them. Common types of bankruptcy fraud include petition mills false oath concealment of assets and fraudulent conveyance. Multiple filings are not per se fraudulent; as with all things in the law it depends on the circumstances.
Bankruptcy Fraud should be distinguished from Strategic Bankruptcy which is not a criminal act (but may prejudice a judge against the filer if there is evidence that bankruptcy is being used strategically). In the United States bankruptcy fraud is a federal crime. Its provisions are found at Title 18 of the United States Code. It is prosecuted by the United States Attorney typically after a reference from the United States Trustee the Interim Trustee or a bankruptcy judge. Bankruptcy fraud can also sometimes lead to criminal prosecution in state courts under the charge of theft of the goods or services obtained by the debtor for which payment in whole or in part was evaded by the Fraudulent Bankruptcy Filing.
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