Bankruptcy

Don?t risk your bankruptcy discharge ? list all your assets

By David Leibowitz, Illinois and Wisconsin Bankruptcy

If you file a bankruptcy case, you have to disclose all your assets.  You have to show your bank statements to the bankruptcy trustee.  You have to show your tax returns to the trustee too.  It’s not as easy as you think to hide assets. Nobody will believe that you don’t have a checking account.  Nobody will believe that you don’t have a savings account.  That’s particularly true if you make even a middle-class income.

Today, I saw a debtor get into a world of trouble.  He said, under oath, in his schedules that he had no bank account and no savings account.  But the trustee found out that the debtor did have bank accounts.  He got the bank records.  The debtor had over $8000 in the bank on the date he filed his bankruptcy petition.  He also had a big tax refund coming which he neglected to mention.

This is a huge problem.  What kind of bad things can happen to this debtor who was caught red handed lying to the trustee?

• The debtor will have to come up with that $8,000
• The debtor will have to give up his income tax refund
• The trustee can make a criminal referral to the United States Trustee or the U. S. Attorney
• The trustee can file a complaint to bar the debtor’s discharge in bankruptcy

Essentially, the debtor’s false statements under oath result in the worst of all possible worlds.  The debtor has a bankruptcy on his credit report for 10 years.  The debtor loses all of his non-exempt assets.  The debtor can’t get rid of the debts he had as of the date of his bankruptcy.  And the debtor faces the risk of criminal prosecution.

My advice?  Don’t let this happen to you.  Tell your bankruptcy lawyer everything.  Be honest.  Don’t hide assets.  Remember, in bankruptcy, an honest debtor can get a fresh start.  A dishonest debtor can have all kinds of books thrown at him.

Lakelaw represents honest debtors in bankruptcy cases in Illinois and Wisconsin.  Call us at 1 866 LAKELAW (525-3529).

Full post as published by Bankruptcy Law Network on January 21, 2010 (boomark / email).