What If I “Forget” to Disclose All of My Assets?
In the world of personal bankruptcy, hiding assets or giving them away to trusted friends and family members for safekeeping is quite possibly the oldest trick in the book. Bankruptcy examiners, trustees, and attorneys from the Department of Justice know how to search for assets that disappeared on the eve of bankruptcy. In most cases, these assets are identified and returned to the bankruptcy estate where they rightfully belong.
Of course, returning assets is where the process starts, not where it stops. Where appropriate, the bankruptcy trustee or DOJ attorney may take legal action to penalize you for attempting to defraud your creditors. Most commonly, the appropriate party will ask your bankruptcy judge to deny your petition for bankruptcy. In some cases, the DOJ may even file criminal charges against you.
Can a bankruptcy trustee demand that you include in your bankruptcy estate property acquired after filing for bankruptcy? In general, the answer is no, but there are several notable exceptions. If you receive property from an inheritance, a life insurance settlement, or a divorce decree within 180 days of your petition date, you may be obliged to return some or all of these proceeds to the estate.
Why do these rules exist? The bankruptcy code is designed to give debtors a fresh start, even at the expense of their creditors. However, creditors are not without certain protections. These protections include assurances that the debtor cannot duck his financial responsibilities by sheltering pre-petition assets or preemptively shielding post-petition wealth by declaring bankruptcy just before a major payday.
How does timing affect your bankruptcy case? What kind of assets should you make sure to declare? The attorneys and expert counselors at the Dallas law firm of Fears Nachawati know how to help you answer these questions. Find out how we can help you by contacting our team today.