When you file for bankruptcy, you’re asked to submit a list of your assets—everything you own—to your bankruptcy lawyer. If you’ve been tempted to hide some of your assets from your bankruptcy lawyer, consider the consequences.
You Won’t Get a Discharge
The entire goal of filing for bankruptcy—particularly Chapter 7 bankruptcy—is to receive a discharge of debts. But if the trustee finds out that you’ve hidden some assets, you will no longer be eligible for that discharge. You will be required to pay all of your debt.
If you end up skating through the bankruptcy without the trustee finding out about your dishonesty, don’t think you’re safe from repercussions. If the trustee discovers it within one year of your debts being discharged, he can revoke your discharge. And you’ll be back to square one.
Your Property Will Still Be Sold
Your bankruptcy case will not be dismissed. This means that any nonexempt property will be sold off to pay your debts. The remaining amounts will be your responsibility. Not only will you lose your rights to get debts discharged, but you will also lose assets.
You Won’t Be Able to Discharge Those Debts—Ever
This means you won’t be able to turn around and file for bankruptcy again in the hopes of getting your debts written off. The bankruptcy geniuses knew this would be a temptation. If you hid assets, you’ll be stuck with the debts from that bankruptcy filing.
You Could Spend Time in Prison
Jason Sheehan of New Haven, Connecticut, was sentenced to three years of prison and three years of supervised release for willfully making a false declaration about his assets in his bankruptcy case and engaging in tax fraud and embezzlement. Steven Gregory of Boise, Idaho, was sentenced to almost the same amount of prison time for willfully concealing a five percent ownership in a company and a subsequent $330,000 payout during his bankruptcy case.
You Could Be Fined $500,000
Because you sign your bankruptcy documents under penalty of perjury, you can be charged criminally for willfully concealing assets. This can result in a fine of up to half a million dollars or, as mentioned, a prison sentence of up to five years, or both.
Bankruptcy is serious business. You can’t just pick and choose which assets you want to report and which ones you don’t want to report. All of your assets must be disclosed to your bankruptcy lawyer, particularly if you want to avoid criminal charges, loss of assets, and hefty sums of additional debt.