Why you should not hide your assets in bankruptcy

• 9 Mar 2018
• Bankruptcy Lawyer

Introduction

People who file for bankruptcy are generally looking to have their debts “discharged” and wiped away clean. In order for that to happen, you need to keep a record of everything you own, including your assets. You will not be in line for that entitlement, by choosing to not list your assets.

What can happen?

According to every bankruptcy lawyer, the trustee will find out, eventually. There are a few things that will affect the outcome once you make this choice.

1) You will still be responsible for all your debt. That debt you were trying to get rid of, in the first place, will still be on the table. According to one bankruptcy lawyer, that is just the tip of the iceberg.

2) Your case will still be on the table. Your property will be used to pay off any outstanding debts you owe. Any debt that is not paid for by your property will also be your responsibility.

An Example

You owe $300,000. The property is worth only $200,000. You will still owe the other $100,000. Get the picture!?

3) You may have received your “discharge” already. What happens when the trustee finds out about this after the fact? He or she can move to have your discharge “revoked.” The trustee has the right to do this. The window is one year’s time after the case has closed. Your case may still be open. The point is, they can take it back, and you will be held responsible.

Can you be charged with a criminal offense?

The answer is yes. You signed on the dotted line. You indicated that everything you have stated is correct, to the best of your knowledge. You now face perjury. You may face a $5,000 fine, up to five years in jail, or both.

It is not worth it. You need to disclose everything. Everything you do will come back in time to you.

How will the trustee challenge your position?

The trustee will file what is called a “adversary proceeding.” That is an official lawsuit challenging the validity of your statements.

How do you know when you have concealed an asset?

1) You lied about the assets you own.

2) You transferred the assets into someone else’s name for “safe keeping.” You are still the original owner. The other person is just holding them for you.

3) Did you create a fake mortgage? A fake mortgage is something that gives value to something that does not have any.

Assets can include, but are not limited to the following:

1) Retirement benefits or lottery winnings.
2) A inheritance or potential inheritance. Any lawsuit you have filed that is currently active.

Conclusion

Anyone can make an honest mistake. People who take the necessary steps to correct the mistake will not see much of a problem. It is those people who leave out information, with the intent to defraud, that the courts will find an issue with.