Penalties for Falsified Income Information for Credit Decision

Lying to get credit, including exaggerating your income, is a potentially serious offense that could land you in legal trouble, warns both the Columbia University Legal and Financial Resource Center and the book "How to File for Chapter 7 Bankruptcy."

Bankruptcy Considerations

If you defraud your creditors by lying on an application and then try to file bankruptcy on the debts, you could be imprisoned for federal bankruptcy fraud, according to the book "How to File for Chapter 7 Bankruptcy." Also, you could be forced to pay resulting debts regardless of your financial situation through wage garnishments.

Financial Aid Considerations

Applying for federal financial aid may not seem like a credit application, but in a sense it truly is, according to FinAid. If you lie about your income to try to get more student loans and grants and your school catches you, you can be subject to potential civil and criminal consequences.

Significance

It's hard to determine exactly how much you'll pay or time you'd serve for defrauding your creditors about your income to get accounts. The Internal Revenue Service notes that some people convicted for credit and tax-related fraud received anywhere from one to more than five years in prison.

References

• "How to File for Chapter 7 Bankruptcy"; Stephen Elias, Albin Renauer and Robin Leonard; 2009
• Omni Law at Columbia: Legal and Financial Resource Center
• FinAid: Financial Aid Applications
• IRS: Examples of Bankruptcy Fraud Investigations