Pitfalls of social media in bankruptcy: What you post can be used against you

What you say on social media can and will be used against you in a bankruptcy court. The majority of people nowadays have some type of social media account; whether it is Facebook, LinkedIn or Twitter, most of us try to look good and successful. Looking too good can be a problem when you are in bankruptcy court and looking good could trigger suspicions of fraud. Typical frauds against a bankruptcy court including hiding assets and knowingly making purchases and entering into contracts shortly before filing for bankruptcy protection. Bankruptcy filers found guilty for fraud upon the bankruptcy court face harsh penalties including fines, disallowance of bankruptcy relief and imprisonment.

The FBI routinely investigates suspicions of bankruptcy fraud, and they look at social media accounts.

The FBI actively investigates white-collar crimes such as bankruptcy fraud and publishes information further explaining the focus on bankruptcy filers who lie to the court, provide false financial records and run up credit cards with no intention of paying them off (“credit card bust-outs”). See this Bankruptcy Fraud information published by the FBI for more information.

In most cases, the bankruptcy trustee and the judge accept the information contained in the bankruptcy petition as true, unless there is a good reason to look beyond the documents and information presented to the court. Nevertheless, there are some bankruptcy trustees and creditors who make it a matter of policy to search for and review social media accounts to look for indications that something does not match up and there may be a reason to dig deeper.

What stories do your social media sites tell about you if a bankruptcy trustee or judge is presented with snapshots of your posts? 

When you file a petition for bankruptcy protection, you must truthfully list all your income, assets and debts. If the information you provide is not true and correct, your bankruptcy case could be dismissed and the bankruptcy court could find you committed fraud, which can lead to serious consequences. If creditor or the trustee searches your social media history and finds information that is different from what you presented to the court, the outcome can be bad.

Recent posts and pictures with cars, boats and assets not listed in your bankruptcy petition could be a red flag. Expensive dinners and vacations could also lead an investigator to dig further into your reported income and assets. Any large purposes within three months prior to a bankruptcy filing can be brought to the bankruptcy court with a request for a dismissal of your case. There might be a suspicion that you have cash income from a job not included on in your bankruptcy petition. Anything that could be misconstrued can damage your credibility.

An experienced bankruptcy attorney can help you understand how social media posts can affect your bankruptcy case.

Being open and honest with your bankruptcy attorney is important to their ability to prepare a proper bankruptcy petition. If you have large purchases too close to the filing date, you might be encouraged to wait another month before filing. In any case, knowing how social media can affect you is important.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. Don’t forget to keep up with Joseph Wrobel, Ltd. on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney today.