Hiding Assets in Bankruptcy
Bankruptcy is a federal statute that is designed to provide a fresh financial start for those who file for protection against debts. There are generally two forms of bankruptcy. One is a reorganization plan that allows the petitioner to use disposable income to pay off a portion of their unsecured obligations. The other is a liquidation plan that involves the sale of non-exempt assets to satisfy the petitioner’s obligations as much as possible.
The one thing all types of bankruptcy filings share in common is the requirement that the petitioner be completely honest about their income and assets. That being said, some individuals and businesses might try to hide or shield assets. If you’re caught hiding assets or income, the consequences can be severe. Your bankruptcy case can be thrown out of court, and if you’ve already been discharged of your debts and it’s discovered that you have hidden assets, your discharge can be voided and your debt obligations restored. Even worse, you could potentially face criminal charges for bankruptcy fraud.
If debt is overwhelming you anywhere in Los Angeles County or Orange County, California, contact The Orantes Law Firm. Our legal team will go over your finances with you and advise you of your best options under the bankruptcy code. We will then help you assemble and complete the necessary paperwork and stand with you as you navigate the system. We have been helping others like you for more than 20 years.
What Does Hiding Assets Mean?
Hiding assets can take many forms. Hiding doesn’t necessarily mean, for instance, taking a boat out of your garage and putting it in a cousin’s garage—though that certainly qualifies. Hiding simply means not listing an asset on your bankruptcy petition.
The one thing consistent with all forms of bankruptcy is that you, as the petitioner, must be open and honest, which means declaring every penny you earn and everything you own—and also every debt that you owe to others.
People actually do hide assets in a fashion similar to the boat example above. They may “sell” a car to a friend or family member with the stipulation that they’ll get it back once bankruptcy is over. Some even create fake liens or mortgages on their homes or property to make it seem like those assets have no value, and thus aren’t worth liquidating.
How Are Hidden Assets Discovered?
In most forms of bankruptcy, you will be assigned a trustee who will oversee everything. This person has power to review what you submit. During a mandatory creditors’ meeting, this person will ask you questions about statements and information you’ve submitted, including assets. In addition, your trustee may search public records, pore through your tax returns and bank records, and even do online searches to see what you’ve posted.
Finally, a family member, friend, spouse, co-worker, or business associate may simply report you and your actions to the bankruptcy court, or may expose your tactics in an online post.
What If You’re Caught?
If you’re caught, the trustee can have your petition thrown out, and if a discharge has already been issued, it can be revoked. If your filing is thrown out, the debt hounds will be back after you for what you owe.
The court may also decide that the debts you listed cannot be discharged in any future bankruptcy filing. In any situation, you won’t be able to file for bankruptcy again for a specified period of time, usually a year minimum.
There is also the possibility of being charged under the federal code with bankruptcy fraud. The penalties for bankruptcy fraud can be pretty severe—up to five years in prison and/or a hefty fine.
Seek a Secure Future
Resist the temptation to hide. Even in a liquidation filing, many of your assets may be exempt from seizure, and in a reorganization plan, you often can keep everything. There’s really no need to shift, conceal, or lie about assets. The consequences can be too great.
For all your questions and concerns about bankruptcy in the counites of Los Angeles and Orange, contact The Orantes Law Firm immediately. Your first consultation is always free.