Don't play games with your bankruptcy discharge, be sure to disclose all your assets

Disclose ALL Your Assets

Folks, filing for bankruptcy ain’t poker. Unlike five card stud, bankruptcy requires laying all your cards on the table. No bluffing allowed. Playing games can cost you your discharge or even your freedom. The number one rule of bankruptcy is full disclosure. In exchange for debt relief and a fresh start, you agree to disclose all of your assets to the court. Any bankruptcy attorney will tell you, the process isn’t as much about your debts as it is your assets.

The Trustee

When a chapter 7 bankruptcy case is filed, it is assigned to a case trustee who essentially works for your creditors. It is the trustees’ job to look over your bankruptcy papers to see whether you have any property that can be sold to satisfy some of your debts. All property that is exempt you keep. All property that is non-exempt is subject to sale by the trustee. Trustees are paid 25% of the sale price of the property they sell. It’s their job to look for assets, and generally speaking, they’re pretty damn good at it.

Bankruptcy Fraud is a Crime

If you accidentally fail to include an asset in your bankruptcy, there is a chance you’ll be able to amend the papers to protect the property. However, there is also a chance you and the trustee won’t see eye to eye. The trustee may allege fraud and file a lawsuit objecting to your discharge. You’ll be forced to pay big attorney’s fees to defend the suit.

If you intentionally leave valuable assets out of your bankruptcy, you have committed a federal crime. The F.B.I. investigates bankruptcy fraud and the U.S. Attorney prosecutes bankruptcy fraud cases. Similarly, transferring assets out of your name before filing for bankruptcy with the intention of hindering a creditor’s claim is absolutely not allowed. You can’t just give a valuable asset to a friend or relative and then file bankruptcy the next day. Bad idea.

Don’t Get Cute

There’s no need to recite all the elements of bankruptcy fraud here, the important thing to remember is not to get cute. Bankruptcy court is no place to play around. Although it may seem like you’re just filing a few forms in a relatively informal environment, it is vitally important to be accurate. The stakes are high, but in this game you want to put all your cards on the table.