The Dangers of Hiding Assets in Bankruptcy

Are you considering filing for bankruptcy but worried about losing your assets? You’re not alone. Many people in financial distress are concerned about protecting their assets in bankruptcy. The good news is that you may be able to keep certain assets even if you file for bankruptcy. In this blog post, we’ll explore the topic of hiding assets in bankruptcy and discuss the consequences of hiding assets.

In the USA today, roughly eight out of every ten American citizens are in some form of debt. This means that there are millions of people from coast-to-coast who owe money, whether it be to another person or entity.

Out of those millions of people who have debt, there are some for whom the debt is overwhelming, and for them filing for bankruptcy can be just the lifeline they need in order to find a path toward financial restoration, security, and peace of mind. However, even when it is one of the best paths out of the circle of debt, the bankruptcy process can still be a scary path to follow. Some people are afraid to lose everything so they resort to hiding assets in bankruptcy.

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Acting Out of Fear

Because the path of filing for bankruptcy can be a frightening one, some people resort to acting out of fear when it comes to the details of the filings. Some people, motivated by the fear of losing assets try and hide assets during the process of filing for bankruptcy. While the idea of hiding assets seems like a plan that could work, doing so can come with very serious consequences later on in the bankruptcy process. Because the consequences of hiding assets during a bankruptcy filing can be severe, it is important to keep in mind that honesty is always the best course of action when looking to file a bankruptcy case.

The process of filing for bankruptcy is designed to be transparent. To have your debts discharged, you are required to provide detailed information about your income and debts on the bankruptcy documents. However, it’s important to note that failure to fully disclose all of your assets, including recent transfers, can result in potential criminal penalties.

What Can Happen If You Hide Your Property?

What happens if you don’t list all of your property or assets on your bankruptcy documents and the trustee discovers this?

You will not be able to discharge your debts. You will not be able to discharge your debts if you conceal assets from the bankruptcy courts. But your case will not be dismissed under Chapter 7 bankruptcy. You’ll still need to turn over the property that you are not allowed to keep under law (exempt). The trustee will then sell it to pay off your creditors. Any amount that is not paid will continue to be owed.
Your discharge can be revoked by the trustee. The trustee may ask the court to reverse or revoke your discharge if he finds hidden assets. The trustee may do this before or after the case is closed, but not more than one year after discharge.
These debts cannot be discharged in a subsequent bankruptcy. You cannot discharge the debts you listed in bankruptcy in which your discharge has been denied or revoked because of hiding assets.
You may face criminal charges. Under penalty of perjury, you sign your bankruptcy schedules that list your assets, certifying they are accurate and true. For bankruptcy fraud, you can be fined up to $250,000. You could also face a sentence of up to 20 years in prison.

How Will the Trustee Find Hidden Assets?

The trustee who is appointed to examine your case will be skilled in looking for hidden assets. The trustee may find hidden assets in any of the following ways:

Review your debts carefully, considering factors such as the nature of the debt (e.g., if you have significant debt from furniture stores but own very little furniture).
Consider conducting public record searches.
Explore online asset searches as a means of gathering information.
Examine payroll slips that indicate deposits made into retirement accounts or undisclosed bank accounts.
Analyze bank records and tax returns for further insights.
Take into account reports provided by ex-spouses, former friends, coworkers, or business partners.

If the trustee discovers that you have hidden assets, they may initiate a lawsuit in bankruptcy court known as an adversary proceeding. If the court determines that you failed to disclose assets or deliberately concealed them with the intent to delay, hinder, or defraud creditors, your discharge may be denied.

What Happens If You Honestly Forget to List an Asset?

If undisclosed assets are discovered, you may not be able to claim them later. It’s important to be thorough when completing your bankruptcy schedules and ensure that all assets, including items you have yet to receive, are properly listed.

You might have forgotten to include the following assets:

You can obtain information about any lawsuits you have filed or plan to file, as well as details about insurance claims and personal injury lawsuits.
This includes lottery winnings or annuities received over time.
You should also consider any beneficial interests you may have in trusts.
Retirement benefits, even if not yet received, are still considered as available assets.
If the probate court has not yet resolved inheritances or potential inheritances, they should be taken into account.
Lastly, co-owned assets, such as bank accounts, real estate, and automobiles, should be duly considered.

You should file the disclosure documents as soon as you discover the error. If you can prove that your intention was not to delay, hinder or defraud creditors, the court will not deny or revoke the discharge.

How Are Assets Hidden During a Bankruptcy?

When going through bankruptcy, some people try and hide assets that they are afraid of losing. While this is not a good idea, some people under the pressures of debt – hounded by calls from creditors and debt collectors – can see no other way of making sure they do not lose everything. The following are some of the ways people hide assets during bankruptcy:

Lie About Assets: One of the most common ways in which people try to hide assets during bankruptcy is by simply lying about the number of assets they own. One of the ways people do this is by transferring certain assets to be under the name of someone else, or even by giving the assets to others to hold onto throughout the bankruptcy proceedings.

Devalue Assets: Some people going through bankruptcy try to diminish the appearance of their assets’ value. One of the main ways people do this is by creating fake mortgages in order to give the appearance that an asset has no value.

Transferred Assets: Some people transfer assets right before bankruptcy in order to not have to declare them. However, a failure to disclose any asset that has been transferred before the bankruptcy can be looked upon as hiding assets.

Finding Hidden Assets

Something that is important to remember when going through bankruptcy is that the bankruptcy trustee that is assigned to your specific case is bound to be a well-trained, and highly-skilled person who will be looking for any sign of possible hidden assets or non-disclosures.

The bankruptcy trustees go about finding hidden assets by taking a close look at your debts, as well as doing public record searches, online analysis, tax returns, review reports from former spouses or friends, as well as payroll slips that may show deposits into banks or accounts that you have not listed in your bankruptcy papers.

With all of the information so easily accessible to the bankruptcy trustee, it is virtually assured that they will find any hidden assets you may have.

Asset Penalties During Bankruptcy

There are numerous punishments and penalties when it comes to the discovery of hidden assets. One of the most common of these penalties is your inability to be allowed to claim your right to any hidden asset that is discovered, or any asset that you failed to list as an asset during the bankruptcy. If the bankruptcy trustee discovers that you have hidden assets, your bankruptcy will not allow you to discharge your debts, which means you will go forth still owing the complete amount of unpaid debt throughout the bankruptcy.

Revoked Discharges: Your bankruptcy trustee has the ability to revoke (or take back) your debt discharge all the way up to one year after your discharge was originally processed. Through this process, you will also lose the future ability to have those debts discharged through any future bankruptcies. This means that being caught with hidden assets and having your discharge denied means you will be unable to have the previously revoked debts discharged through any other bankruptcy filings or proceedings.

Criminal Charges: The hiding of assets through a bankruptcy proceeding can also result in criminal charges for bankruptcy fraud. Those who face these charges can be required to pay fines up to as high as $250,000, and can even face up to 20 years of imprisonment.

A bankruptcy attorney will be able to determine more about your situation and the types of debts that could be discharged. Working with a bankruptcy attorney can provide you with the debt relief solutions that you need to start experiencing less stress in your day-to-day life due to debts.

Protect Your Assets With the Help of a Bankruptcy Lawyer

You certainly want to avoid finding yourself in bankruptcy court. There’s no need to expose yourself to unnecessary risks. With the assistance of a bankruptcy attorney, you can work towards your goals while staying out of trouble. At the very least, an attorney can help you comprehend that attempting to evade bankruptcy laws is not a worthwhile endeavor.

The experienced attorneys at Bruner Wright P.A. understand the stress and uncertainty that come with financial hardships. That’s why we’re here to help you protect your assets and work towards a brighter financial future.

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By choosing Bruner Wright P.A. as your bankruptcy lawyer, you’ll have the guidance and support of seasoned professionals who will work tirelessly to help you navigate the legal complexities of the bankruptcy process. Don’t let debt control your life any longer. Contact us today to schedule a consultation and take the first step toward financial stability and peace of mind.

The Dangers of Hiding Assets in Bankruptcy