Debt Restructuring Fraud


DEFINITION of 'Debt Restructuring Fraud'

An illegal technique where an individual or corporation hides or transfers assets before filing for bankruptcy. Debt restructuring allows the fraudster to reduce or even erase the debts and then reclaim the assets. Debt restructuring fraud is a clear abuse of the intent behind bankruptcy laws.

BREAKING DOWN 'Debt Restructuring Fraud'

The guiding principle of bankruptcy is that the creditors and debtors can find a compromise that favors neither party, but satisfies both. By knowingly concealing or misstating assets, the debtor is abusing the process to escape financial liabilities while holding onto the wealth that those liabilities - and thus the creditors - helped create.

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  1. Are secured personal loans better than unsecured loans?

    Secured loans are better for the borrower than unsecured loans because the loan terms are more agreeable. Often, the interest ... Read Full Answer >>
  2. Can personal loans be included in bankruptcy?

    Personal loans from friends, family and employers fall under common categories of debt that can be discharged in the case ... Read Full Answer >>
  3. Can Sallie Mae loans be consolidated?

    Sallie Mae loans can be consolidated with other federal loans, but not with private loans. For federal loan consolidation, ... Read Full Answer >>
  4. How does Sallie Mae disburse funds?

    Sallie Mae is the number one provider of financial aid and student loans in the United States, servicing over 25 million ... Read Full Answer >>
  5. Do Sallie Mae loans go directly to your school?

    Sallie Mae is the biggest provider of financial aid and student loans in the United States. The company operates as a private ... Read Full Answer >>
  6. Can Sallie Mae garnish my wages?

    Private lenders such as Sallie Mae can garnish wages. In the case of federal student loans, the government has the power ... Read Full Answer >>

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