The Consequences of Hiding Assets in Bankruptcy

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Hiding assets is one of the best ways to get in trouble with the U.S. Bankruptcy Courts. When you file for personal bankruptcy means you agree to tell the Courts about all your assets as well as your debts. The U.S. Bankruptcy Courts also require you to sign the bankruptcy paperwork under penalty of perjury. In other words, you swear that all the information about your case—which includes your assets, income and debts—is the truth. However, if you file for bankruptcy and hid assets, there will be consequences.

Hiding Assets Means That You Transfer Property or Omit Property from the Bankruptcy List

You are prohibited from hiding assets by transferring money or omitting personal assets. This means that you can’t transfer any money or property into someone else’s name or there are going to be consequences. Let’s say you are planning to file chapter 7 and you a second home. You don’t want your property to be sold by the bankruptcy trustee to pay back creditors. So you transfer your house from your name to a relative or friend’s name before you file for bankruptcy. According to Bankrate, once the U.S. Bankruptcy Courts finds out there’s a likelihood that you will lose the house and get the relative or friend in trouble.

Your Bankruptcy Case Will Be Dismissed If You Hide Assets

Typically, a bankruptcy case can be dismissed by a bankruptcy trustee for a variety of reasons. For instance, if you fail to take the required credit counseling courses or miss payments, a trustee will dismiss your case. However, you case is also dismissed if you’re hiding assets such as property. This means that you won’t have legal protection against creditors trying to sue you, garnish your wages or foreclose on your home.

Jail Time is Possible

If the U.S. Bankruptcy Courts find out you’re hiding assets, then you can be punished legally. In other words, you’re prosecuted for fraud. Jail time, according to Nolo, is not unusual for anyone hiding assets.

Seek Legal Assistance

Don’t attempt to file bankruptcy without legal help. Whether you’re considering bankruptcy or actually planning to file, it’s best to contact a bankruptcy lawyer. This lawyer will work with you to make sure that all creditors are listed and that you haven’t transferred any property.