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Bankruptcy Debtors Must Report All Income - Even If Earned Illegally

Posted By admin || 8-Sep-2010

Bankruptcy Debtors Must Report All Income - Even If Earned IllegallySocial Services worker Melanie Cholewinski could face federal charges for bankruptcy fraud because she failed to disclose more than $91,000 that she allegedly stole from a public financial assistance fund.

A 20-count felony theft complaint last week accused Cholewinski, 36, of using her job with the Clark County Social Service Department to unlawfully funnel $91,235 in financial assistance checks to her husband between October 2008 and March 31. Her husband, Michael Wayne Brown, 36, was charged in the complaint also.

Cholewinski is alleged to have steered most of the missing taxpayer money, more than $79,000, to her husband after she had filed a Chapter 7 petition in U.S. Bankruptcy Court on April 10, 2009, records show.

Criminal charges were brought against Cholewinski three weeks after her debts were discharged in bankruptcy; but the bankruptcy trustee could rescind the bankruptcy discharge if it is found that she lied about her income. Not only that, if Cholewinski failed to disclose all of her income in bankruptcy, she could be prosecuted for bankruptcy fraud and fined up to $250,000 and/or spend up to five years in prison.

Debtors who have income that was obtained illegally or "under the table" must still report this income in bankruptcy court. That includes income received that was not reported to the IRS, was not placed in a bank account or that for whatever reason the debtor desires to hide.  All income must be reported in bankruptcy and failure to report all income could constitute bankruptcy fraud. To find out more about other bad behaviors you should avoid during bankruptcy, contact a Dallas-Fort Worth bankruptcy attorney today.

Categories: Bankruptcy
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