Hiding assets in bankruptcy: Brilliant or a bad idea for your debts?

Don’t get influenced by others who say that they know someone who had safely kept all his assets even after filing bankruptcy. It’s a false statement. They want to mislead you only. The truth is, transferring and hiding assets are a federal crime. Unfortunately, there are many such people who have tried playing this tricky game. Simply ignore the person who is suggesting this kind of trick that transferring assets to your wife’s or son’s name is a good way to hold them. If you do so, then you’ll simply turn the situation into worse. Here’s how:

What is bankruptcy fraud?

When you intentionally hide your assets in bankruptcy, the court considers it bankruptcy fraud. Remember, the creditor will surely check your account history after filing bankruptcy. If the creditor notices a bunch of charges just before the bankruptcy filing, then he/she will consider your case as suspicious. If you transfer a small amount of money for family expenses, then it’s fine. But if you use the money to buy luxury goods, or transfer a big amount of money to your relative’s account, then your case will be considered as bankruptcy fraud.

How people usually hide assets before filing bankruptcy

People use many wrong tricks to hide their assets before filing for bankruptcy. But, they don’t know all these tricks can be caught easily by the trustee. Some basics, tricks people usually to hide their assets are as follows

  • Transferring assets, including cash, jewelry, home, furniture, bonds to any relative’s name just bBefore the filing.
  •  Make a false comment that they’ve no assets.
  • Trying to create fake liens to show that the assets have no value.

6 After-effects of committing bankruptcy fraud

The trustee can check your public records, pay slip, recent search, bank transaction, and reports from an “ex” including, ex-colleague, ex-spouse, ex-friend. The trustee can create a problem once he/she finds any suspicious activities.

Hiding property and assets in bankruptcy can be dangerous as it’s a legal crime.

  1. Bankruptcy fraud can result in rejection of your discharge

The court will dismiss your discharge within a year in case you hide, give away or destroy your assets to deceive the creditor.

  1. The trustee can influence the court to withdraw your discharge

In case the trustee discovers that you’ve hidden assets even after receiving a discharge, then he/she can knock the court to withdraw the discharge. This can happen before your case gets closed or a year after the date of discharge.

  1. Transferring doesn’t matter, the trustee can get back the assets

The trustee has always the right to get back the transferred assets. The trustee can legally ignore your recent property transfer (within 2 years before filing for bankruptcy) to get back the assets on behalf of the creditors to pay their bills.

  1. You’ll be still in bankruptcy

You don’t have assets in your name that doesn’t mean the case will be discontinued. As per the law, you’re still responsible for handing over your property to the trustee to pay back the creditors.

  1. You’re not allowed to discharge the listed debts in next bankruptcy

Your listed debts will not be discharged in next bankruptcy in case your discharge gets rejected due to hidden assets.

  1. Bankruptcy fraud is a federal crime as per the law

You’ll be treated as a criminal due to bankruptcy fraud. The trustee can file an adversary proceeding in the court. If the court discovers that you’ve been intentionally hiding or transferred the property and assets to defraud the creditors, then your discharge will get dismissed. As it’s a federal crime, you may get caught, be imprisoned and get slapped with a fine by the court. Moreover, your trustee can file your case for investigation in a case of any suspicious activity.

Final thoughts

Try to take an immediate action in case of any random mistake. If you forgot to disclose any of your assets unintentionally while filing for bankruptcy, then file papers to confess the mistake and mention the asset as early as you can. Thus, the court will give your case a second chance as you had no intention to commit bankruptcy fraud.

 

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