Consequences of Hiding Assets in Bankruptcy
Provided by HG.org
When going through bankruptcy, it is important to ensure all assets are considered so that the right process is utilized for the applicant such as Chapter 7 for individuals with an excess of debts and low disposable income. If the person seeking to complete bankruptcy hides any of his or her assets, he or she may face serious consequences to include penalties and contempt of court.
Going through bankruptcy is a process that many individuals and companies are faced with when revenue and income is not enough to pay off debts such as small business loans, homeowners loans and liens and various other issues. However, bankruptcy is similar to being under oath, and it requires the truth up to and including all assets the owner of an estate has in his or her possession. False statements, concealed income or assets and lying to the authorities in bankruptcy matters may lead to serious consequences that affect the applicant for years. It is better to disclose all and change the chapter used than to hide the information and face penalties when discovered.
There are a number of ways to hide assets that are known. This could include transferring the assets to another person only to be retrieved after bankruptcy has been completed, selling off property that is reclaimed later and various other ways. Keeping these items hidden in these manners are similar to lying, and this could lead to severe penalties to include the possibility of never being able to file for bankruptcy or finish the process. These cases demand all assets listed in the application. This permits the authorities to ensure the appropriate process is used and that the financial lenders are provided with payment when the borrower or applicant is able to pay back some of the monies.
The Bankruptcy Process Explained
One of the reasons that hiding assets affects the process so much is that the correct chapter must be filed based on the income, revenue and other assets the person possesses. If he or she has hidden an entire stream of revenue, he or she may not need to file for bankruptcy at all. Additionally, if the individual is wanting to file a Chapter 7 and wipe out all or most of his or her debts but earns enough to have disposable income that may pay for at least some of the debts, Chapter 7 would be the incorrect procedure. Continuing with this action may take away from others that need to file this type of bankruptcy due to various circumstances outside their power.
Those that work for bankruptcy processes are able to research and find hidden and unrevealed assets that applicants possess. Even if the debtor is unaware that a procedure exists to discover these funds or holdings, the agents may find what is needed to disqualify the applicant. The hidden assets may not qualify for bankruptcy or to discharge through the process. Then, the applicant may be rejected based on these hidden assets. After the data has been revealed, the person seeking bankruptcy could face criminal charges and penalties due to perjury. Fines and jail are usual consequences.
Mistakes in Applications
While there are consequences when hiding assets, sometimes the applicant made a mistake in paperwork or when filling out certain fields. Some persons are confused when faced with so many files that must be filled out according to real world details. It is often best to hire someone to assist with ensuring the documents are completed appropriately and then passed onto the correct authority. It may be possible to explain that the hidden assets were a mistake and that no deception was attempted in the situation. The bankruptcy department officials may understand. However, this would require starting over or adjusting everything to match the new information.
When the hidden data has been discovered or disclosed, penalties may be issued. This could lead to these specific or all assets
not going through or being eligible for discharge. With the action of hiding certain details, it is possible that the application is denied or rejected. If the action of hiding assets is discovered and no actions are taken to remedy the situation on behalf of the estate holder, he or she may face criminal charges for perjury. This could lead jail and large fines.
Legal Help with Bankruptcy Processes
It is imperative to hire a lawyer to assist with bankruptcy to prevent possible disaster of facing criminal charges and rejection or denial of bankruptcy.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.