It’s no secret that the economy experiences large swings from year to year. Sometimes, businesses thrive and consumers flock to spend all their disposable income. In a matter of a few months, those same small businesses are closing their doors, and those once-carefree spenders are pinching every last penny.
When financial times are good, it’s important to stash that cash and save certain funds for those times when finances are leaner. If consumers aren’t seriously careful, they might find themselves filing for financial hardships, defaulting on loans and mortgages, etc. When this happens, there are serious legal penalties for lying to the bankruptcy court, and it’s important to be safe and smart with money to avoid legal trouble. Stay informed, and take a look through our best list of ways to recognize the warning signs of bankruptcy fraud, and learn how to avoid it in the future.
Image Courtesy of Tax Credits via Flickr.
Concealing Assets
If a friend of loved one confides he or she is doing some strategic shuffling to hide or conceal financial or material assets, it could be a huge red flag. Especially in the world of business, concealing valuable collateral points towards sub-legal activity. Sure, every business owner wants to save his company, but not at the expense of his reputation. Help steer him in the right direction and seek legal help together before proceeding.
Large Transfers
Huge amounts of money can sometimes be transferred to a different account, under the legal radar. Keep your eyes and ears peeled for any similar bank activity, especially if you own a business and have a hand in the finances. Remember that Uncle Sam will surely examine bank statements and financial history in a bankruptcy court and you can’t be too careful.
Gifting the Grandkids
Baby boomers who own successful, thriving companies know all too well that gifting the grandkids can be one of the best ways to push money out of a large account, tax-free. But be wary of a business owner who seems to be a little too generous. He or she might know a financial crash is looming, and is trying to preserve every last dollar, which could be a financial warning sign.
Now that you have a firm list of a few those tell-tale warning signs of bankruptcy fraud, you’ll know how to avoid them in the future. Spread the word to loved ones—especially those with small businesses—and learn how to safely stash any extra funds for times when finances are leaner. You’ll never regret being financially responsible, even if it costs a few extra dollars in the long-run. Live by a few smart finance rules, and always enjoy a business—or even family budget—happily in the black, despite financial and economic swings.
