Certified Fraud Examiner Practice Exam 2026 – All-in-One Guide to Master Your Certification!

The most common type of bankruptcy fraud scheme is the concealment of assets. In this type of scheme, individuals or entities attempt to hide their assets when filing for bankruptcy to avoid having those assets liquidated to repay creditors. This can include transferring ownership of property to friends or relatives, failing to disclose bank accounts, or undervaluing assets to make them appear less significant than they really are. The intention behind this concealment is to keep valuable assets out of reach from creditors, thereby undermining the integrity of the bankruptcy process.

Concealment of assets is particularly prevalent because it directly undermines the principle of bankruptcy, which is designed to provide a fair distribution of a debtor's assets to creditors. Effective bankruptcy laws and regulations require full disclosure of all assets and liabilities, making concealment a serious offense that can lead to severe legal consequences.

While other types of bankruptcy fraud schemes also exist, such as falsifying financial statements, abusing exemptions, and making preferential payments to certain creditors, these are generally less common. Each of these schemes involves different tactics and motivations but concealment remains the most frequently encountered issue in bankruptcy cases.