Primary Difference between Foreclosure and Bankruptcy Courts – Bankruptcy will Not Tolerate False Claims; Fraud Stoppers Can Help Protect Your Rights


In the realm of financial distress, individuals facing foreclosure or bankruptcy often find themselves entangled in complex legal processes. While both foreclosure and bankruptcy courts deal with financial difficulties, there exists a crucial distinction in their approaches. Bankruptcy courts, unlike foreclosure courts, have a stringent stance against false claims, ensuring the integrity of the proceedings. In this article, we delve into the significance of this difference and explore how organizations like Fraud Stoppers can assist individuals in safeguarding their rights during bankruptcy proceedings.

Understanding Bankruptcy and Foreclosure:

Foreclosure and bankruptcy share a common denominator as unfortunate consequences of financial hardship. Foreclosure primarily relates to the process in which a lender seizes a property due to the homeowner’s inability to make mortgage payments. On the other hand, bankruptcy refers to a legal status in which individuals or businesses are unable to repay their debts.

The Power of Bankruptcy Courts:

Bankruptcy courts stand apart from foreclosure courts due to their specialized nature and powerful jurisdiction. Bankruptcy judges possess extensive powers granted by the U.S. Congress, enabling them to issue orders, processes, and judgments essential for the proper execution of bankruptcy cases. This authority empowers bankruptcy judges to impose sanctions on creditors, their attorneys, or agents who file false claims or engage in fraudulent practices.

The Role of False Claims:

False claims pose a severe threat to the integrity of the bankruptcy process. A false claim refers to a proof of claim known by the creditor to be factually untrue when submitted. Bankruptcy courts strongly condemn such deceptive practices, as they undermine the fair distribution of assets among creditors. In line with this, bankruptcy laws and regulations, specifically 18 U.S.C. § 152, impose severe penalties, including fines and imprisonment, on individuals who knowingly and fraudulently present false claims.

Protecting Your Rights with Fraud Stoppers:

To navigate the complex landscape of bankruptcy and counter false claims effectively, individuals need reliable guidance and support. Organizations like Fraud Stoppers specialize in assisting individuals facing fraudulent practices during bankruptcy proceedings. These advocacy groups educate individuals about their rights, help them understand the various classifications of bankruptcy, and encourage thorough research and scrutiny of every aspect of their bankruptcy filing.

It is essential for individuals contemplating bankruptcy to engage in a comprehensive discussion with their bankruptcy attorneys, considering both the advantages and disadvantages. A thorough understanding of the bankruptcy process, its implications, and the responsibilities of both debtors and creditors is crucial to safeguarding one’s interests.

Furthermore, should individuals encounter false or inflated claims filed by creditors, it is imperative to consult with their bankruptcy attorney regarding the filing of objections. By taking action against false claims, individuals not only protect their own interests but also prevent the defrauding of their estate and ensure a fair distribution of assets among creditors.

Bankruptcy courts stand as a formidable defense against false claims and fraudulent practices, ensuring the integrity of the bankruptcy process. While navigating the complex realm of bankruptcy, individuals need to be aware of their rights, conduct thorough research, and seek reliable guidance to protect their interests effectively. Organizations like Fraud Stoppers can play a vital role in assisting individuals facing fraudulent practices, empowering them with knowledge and resources to combat false claims. By understanding the primary difference between foreclosure and bankruptcy courts and the consequences of false claims, individuals can make informed decisions and secure a fair resolution to their financial distress.

Primary Difference between Foreclosure and Bankruptcy Courts – Bankruptcy will Not Tolerate False Claims

Bankruptcy, like foreclosure, has become a production business. While nontraditional mortgage loans (NTMs) and foreclosures are the products of a patented scheme, bankruptcy is more of a legislated racket. Bankruptcy and foreclosure structures have attorney “mills” operating as a business by shuffling humans through a cattle car-like process, both systems personally affect the individuals and their families – and both are tragedies.

Posted on February 9, 2014 by

The reason for the comparison is although they both have federal oversight in common – only one has a tough and powerful specialized court system. Even with a tough bankruptcy court, evil shysters and psychotic scammers materialize to pick every last morsel off of the carcass. [There is comfort in knowing Karma is never late].

Bankruptcies began to increase during the 1960s and have grown dramatically since 1980. Between 1980 and 2004, bankruptcies grew at an annual average rate of 7.6 percent a year. It is not surprising that another industry, the general-purpose credit card was born in 1966, when the Bank of America established the BankAmerica Service Corporation that franchised the BankAmericard brand (later to be known as Visa) to banks nationwide. The target – the American consumer.

Many families have sought the protection of bankruptcy in order to eliminate debt and try to save their homes from the egregious Wall Street land-grab securities’ scam. But just how safe are you in a bankruptcy court? Bankruptcy should be your last resort and your discussion with your bankruptcy attorney should include all of the pros and cons. Don’t just rely on the attorney’s synopsis – do your own research. There are several classifications of bankruptcy and if you are contemplating it – you should try to understand all of them and what they mean to you and your family.

Nothing should be taken for granted. If you decide to file bankruptcy scrutinize every paragraph in your filing – you are the one filing the claims even if it is through an attorney. Then review and discuss every claim in your bankruptcy filed by your creditors.

No matter what Chapter petition you file – 7, 11, 12, 13, etc. declare, report and review everything and be honest. That goes for creditors too. A dishonest claim or oath is criminal and according to 18 U.S.C. § 152 “shall be fined under this title, imprisoned not more than 5 years, or both.”

Some creditors think they can make your bankruptcy their feeding frenzy by filing false and inflated claims. Just because you are bankrupt does not mean you should ignore false claims – you owe it to your other creditors to let them know that someone is defrauding your estate. Discuss with your bankruptcy attorney whether you should file an objection to a false claim (and reiterate your concern in writing).

18 U.S.C. § 152 “attempts to cover all the possible methods by which a bankrupt or any other person may attempt to defeat the Bankruptcy Act through an effort to keep assets from being equitably distributed among creditors.” (Source: 2 Collier on Bankruptcy 1151 (14th ed. 1968)) (emphasis added).

False Claims—18 U.S.C. § 152(4).  A “false” claim is one that is known by the creditor to be factually untrue at the time the claim is filed. Subsection (4) provides:

“A person who…knowingly and fraudulently presents any false claim for proof against the estate of a debtor, or uses any such claim in any case under title 11, in a personal capacity or as or through an agent, proxy, or attorney;…shall be fined…, imprisoned…, or both.

The elements of a false claim violation are:

  1. that bankruptcy proceedings had been commenced;
  2. that defendant presented or caused to be presented a proof of claim in the bankruptcy;
  3. that the proof of claim was false as to a material matter; and
  4. that the defendant knew the proof of claim was false and acted knowingly and fraudulently.”

United States v. Overmyer, 867 F.2d 937, 949 (6th Cir.), cert. denied, 493 U.S. 813 (1989).

On the official bankruptcy proof of claim form at the bottom is a warning:

“Penalty for presenting fraudulent claim: Fine of up to $500,000 or imprisonment for up to 5 years, or both. 18 U.S.C. §§ 152 and 3571.”

What is a fraudulent claim?

Unlike foreclosure, the bankruptcy courts have tried to maintain a higher standard and protect the integrity of the administration of a bankruptcy case. Although bankruptcy judges are not Article III life-term judges, Congress has provided bankruptcy judges with powers under 11 U.S.C. § 105, for instance, allowing them to ”issue any order, process, or judgment that is necessary or appropriate to carry out the provisions” under the bankruptcy codes and procedures. That means the bankruptcy judge has the power to sanction and enforce these statutes when creditors, their attorneys or agents file false claims. Because their power is so awesome – YOU don’t want to be on the wrong side.

And because a bankruptcy judge is on par with a federal court judge, the integrity and soundness of his decisions and court process are closely reviewed. Not just by the local district courts but also by the appellate panels.

False claims and false oaths undermine the integrity of the bankruptcy process and before you even contemplate bankruptcy – or as a creditor, file a false or inflated claim – consider this:

“[A]n act is done with intent to defraud if it is done with the intent to deceive any creditor, trustee, or bankruptcy judge.” U.S. v. Sabbeth, 262 F.3d 207, 216 (2d Cir. 2000) at 217 (statement made by the District Court to the jury).  “The plain language of the false-oath provision punishes a person for making a false statement “knowingly and fraudulently.” The common understanding of the term “fraudulently” includes the intent to deceive. See Black’s Law Dictionary 662 (6th ed. 1990) (“A statement… is ‘fraudulent’ if it was falsely made, or caused to be made, with the intent to deceive.” United States v. Gellene, 182 F.3d 578, 586-87 (7th Cir. 1999).

In plain English – if you are a creditor and know your proof of claim is false and/or inflated or you may have done something unscrupulous to cause the debt to have been incurred, and you filed it with the intention of collecting the falsified amount – just be aware that 18 U.S.C. § 152 may be raised against you – and not just by the debtor.

Foreclosure, like bankruptcy, has become highly specialized – and it too needs its own court system and statutes like 18 U.S.C. § 152. This statute alone might make a lot of attorney foreclosure mills think twice about filing fabricated assignments of mortgage.

If the modification process were run through a program where it forced the system to be transparent we might begin to stabilize the economy. Maybe in foreclosure, since this new mortgage system has become an integral element of our financial structure, Congress needs to craft a new court with rules and procedures based on the integrity once met with the respect and higher standards of the bankruptcy courts.

Now You Can Unlock the Power of Justice and the Rule of Law with FRAUD STOPPERS


Are you tired of being a victim of financial fraud, seeking the justice and legal remedy you deserve? Look no further – FRAUD STOPPERS is here to empower you with the comprehensive tools and support necessary for success. With a wide range of services tailored to your needs, we are your ultimate ally in the fight against fraud.

FRAUD STOPPERS Arsenal of Solutions includes but is not limited to:

  1. Audits & Investigations: Our team of skilled professionals will meticulously analyze your case, leaving no stone unturned in uncovering the truth. We employ cutting-edge techniques and resources to expose the fraud and gather irrefutable evidence. We are the only organization (to our knowledge) that can provide you with a Full Level 4 Bloomberg Securitization Audit and all the loan level data and trust information for all Government Sponsored Loans (GSE’s) and loan placed in private trust (shipped off shores) that do not report to the Securities and Exchange Commission (SEC).
  1. Expert Witness Affidavits & Testimony: Our network of esteemed experts will provide compelling affidavits and testify on your behalf, lending credibility and authority to your case. Their specialized knowledge and experience will strengthen your position in the legal battle.
  1. Turnkey Litigation Packages: We understand that navigating the complex legal landscape can be overwhelming. That’s why we offer comprehensive litigation packages, equipped with all the necessary documents and strategies to mount a strong defense against fraudsters.
  1. Professional Paralegal Support: Our dedicated paralegals are committed to assisting you every step of the way. They will guide you through the process, offer invaluable insights, and provide crucial administrative support to ensure your case is well-prepared.
  1. Nationwide Attorney Networks: We have established a vast network of highly skilled attorneys across the country who specialize in fraud cases. Rest assured, you will be connected with a trusted legal expert who is passionate about seeking justice on your behalf.
  1. Legal Education and Training: At FRAUD STOPPERS, we believe that knowledge is power. That’s why we provide comprehensive legal education and training resources, empowering you to understand your rights, navigate the legal system, and make informed decisions throughout your case.
  1. Debt Settlement Negotiations: Our experienced negotiators will engage with creditors on your behalf, striving to reach favorable debt settlement agreements. We will advocate for your interests, aiming to alleviate the financial burden caused by fraud.
  1. Private Lending: If you require financial assistance to support your legal battle, our private lending options can provide the necessary funding. Our trusted lending partners offer competitive rates and flexible terms, ensuring you have the resources to fight for justice.


And much more! Save Time, Money, and Increase Your Odds of Success with FRAUD STOPPERS’ Proven Products and Programs

If you’re serious about getting the legal remedy you deserve, FRAUD STOPPERS has everything you need to succeed while saving time, money, and increasing your odds of success. Our comprehensive range of proven products and programs is designed to streamline the process, maximize efficiency, and deliver results.

Time is of the essence when it comes to combating fraud, and we understand the importance of expediting your case. With our expertise and resources, we can minimize delays and ensure efficient progress. By leveraging our extensive experience in fraud investigations and legal strategies, you can navigate the complexities of the legal system with confidence, saving valuable time in the process.

We also recognize the financial burden that fraud can impose, and we are committed to providing cost-effective solutions. Our competitive rates for services, private lending options, and expert negotiation skills can help you save money while maximizing the value you receive. Rest assured that we strive to optimize your resources, enabling you to fight fraud without breaking the bank.

Partnering with FRAUD STOPPERS significantly increases your odds of success. Our proven track record and extensive network of experienced professionals ensure that you have the best possible resources at your disposal. From expert witness testimonies to strategic litigation packages and effective debt settlement negotiations, our carefully curated products and programs have a track record of achieving favorable outcomes. With FRAUD STOPPERS by your side, you can maximize your chances of holding fraudsters accountable and obtaining the justice you deserve.

By choosing FRAUD STOPPERS, you can save time, save money, and increase your odds of success. Our proven products and programs, combined with our commitment to your cause, empower you to reclaim your future. Take the first step towards justice by completing the form below.

Remember, with FRAUD STOPPERS, you have a trusted partner dedicated to saving you time, money, and increasing your chances of success. Let us fight by your side and help you put an end to fraud once and for all.

Our commitment to your success knows no bounds. We are constantly expanding our services and partnerships to provide you with the most effective tools in the fight against fraud.

Ready to get started?

Simply complete the form below to begin your journey towards justice. Once submitted, check your email inbox or email spam folder for detailed instructions on how to move your file forward.

Remember, you don’t have to face fraud alone – FRAUD STOPPERS is here to champion your cause and bring you the justice you deserve.

Join us in the battle against fraud today!

After submission, check your email inbox or spam folder for detailed instructions on how to move your file forward to get the legal remedy you seek and deserve.



Fraud Stoppers Logo

THIS SITE IS NOT INTENDED TO BE MISCONSTRUED AS LEGAL ADVICE. FRAUD STOPPERS is a Private Members Association PMA. FRAUD STOPPERS PMA is NOT a law firm, non-profit organization, or government agency.  FRAUD STOPPERS PMA does not operate in the public sector. Although this website is visible to the public  FRAUD STOPPERS PMA does not intend for any information contained in this website to be considered as legal advise.

The information about Foreclosure law and other legal information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.  Information on this website may not constitute the most up-to-date legal or other information.  This website contains links to other third-party websites.  Such links are only for the convenience of the reader, user or browser; FRAUD STOPPERS and its members do not recommend or endorse the contents of the third-party sites.

Readers of this website should contact their attorney to obtain advice with respect to any particular legal matter.  No reader, user, or browser of this site should act or refrain from acting on the basis of information on this site without first seeking legal advice from counsel in the relevant jurisdiction.  Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.  Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client relationship between the reader, user, or browser and website authors, contributors, contributing law firms, or committee members and their respective employers. This site provides “information” about the law and is only designed to help users safely cope with their own legal needs. But legal information is not the same as legal advice — the application of law to an individual’s specific circumstances.

The views expressed at, or through, this site are those of the individual authors writing in their individual capacities only – not those of their respective employers, FRAUD STOPPERS, or committee/task force as a whole.  All liability with respect to actions taken or not taken based on the contents of this site are hereby expressly disclaimed.  The content on this posting is provided “as is;” no representations are made that the content is error-free.

For instant access to an affordable local competent attorney click here