Bankruptcy can be a confusing process filled with seemingly arbitrary rules. And it is only natural to want to keep your property. After all, the debt that is typically discharged in a consumer bankruptcy is to huge corporations that seemingly do not need a little more money. Moreover, the past two years reminded everyone that banks and large corporations are quick to take taxpayer bailouts on one hand, while still foreclosing on people's homes and cars on the other.
Therefore, it is understandable, on some level, why people want to keep as much nonexempt property as possible. That can lead people to transferring a piece of property to a friend or family member to keep the property hidden from the bankruptcy trustee. Other times, people fail to report some of their assets in their bankruptcy pleadings in the hopes that it will go undiscovered. Regardless of the reason, you must not attempt to hide your assets from the bankruptcy trustee.
Understand that when you file for bankruptcy, you swear an oath to the federal court that everything contained in your pleading is completely accurate. If you are caught hiding assets, you will probably not receive your bankruptcy discharge. Aside from losing your bankruptcy discharge, you could also face a fine, lawsuits from your creditors, or even jail time. You do not want to get crosswise with the United States Trustees Office.
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Putting aside the moral considerations of lying to the court, there are several compelling practical reasons warranting being completely forthright with your pleadings. First, a bankruptcy trustee gets paid a commission on the property that is sold as a part of the bankruptcy estate. In other words, bankruptcy trustees want to find assets to sell. That is how they pay the bills, so the chance of slipping something by a bankruptcy trustee is not good. Additionally, if the bankruptcy trustee learns that property was transferred to a friend or family member, they can recover the property.
The good news is that it is not necessary to hide assets. Bankruptcy law is not meant to punish people, and it was not drafted to strip people of all of their property. Consult with an experienced bankruptcy attorney to determine how best to protect your assets. However, that consultation will only be as valuable as you make it. Disclose everything to your attorney so she can help you protect all of your assets. The law allows several exemptions, and a skilled bankruptcy attorney can help you keep your assets while keeping you from being fined or facing jail time.
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