Why Bankruptcy Attorneys Tell Clients To Disclose All Assets in Bankruptcy
Somewhere out there a client believes they can hide an asset in bankruptcy. They think “no one really knows about that vacant lot I own or the truck I keep in my garage, so why does the Trustee have to know about it?” Since non-exempt assets are sold in chapter 7 bankruptcy you can hide assets and thereby avoid their liquidation. Right?
Never hide assets in bankruptcy. Every bankruptcy attorney will tell you that you need to disclose all assets in bankruptcy and be truthful throughout the bankruptcy process. Listing all assets and being truthful with the court and Trustee is one of you duties as a debtor in bankruptcy. This requirement to disclose all assets and be truthful has been shared with you by your bankruptcy attorney at the outset of representation when they went over the Section 342(b) notice.
There are several serious consequences to hiding assets against the advice of your bankruptcy lawyer. If you are thinking about hiding assets in bankruptcy read the following to understand the serious repercussions that will follow your criminal action.
It is possible to commit a crime in bankruptcy. Chief among crimes in bankruptcy is perjury. When you sign your bankruptcy petition you are certifying that everything is true, complete, and accurate. If you sign that certification knowing that you did not disclose assets X, Y, and Z you are placing yourself at risk of committing perjury. In addition, you will be asked whether you have disclosed everything by the Trustee during the Meeting of Creditors while you are under oath, and if you lie during that proceeding you will again place yourself at risk of committing perjury. So, take your bankruptcy attorney’s advice and disclose all assets in bankruptcy.
No Right To Dismiss The Bankruptcy Case
You do not have the unilateral right to dismiss your bankruptcy case once it has been filed. If you concealed an asset and want to fix the error by dismissing your bankruptcy case, you will be sorely disappointed to learn that a bankruptcy case can only be dismissed “for cause.” You chapter 7 bankruptcy case is even less likely to be dismissed if you have non-exempt assets that your creditors will profit from. Since you do not have the right to automatically dismiss your bankruptcy case once it has been filed by your bankruptcy attorney, do yourself a favor by disclosing all assets in bankruptcy.
Forfeit The Asset
Assets that have not been claimed as exempt may be seized by the Trustee and sold in bankruptcy. If you conceal as asset and the Trustee later finds out about it, you may be unable to amend your bankruptcy schedules to claim the asset as exempt. In turn, the bankruptcy Trustee will seize this previously concealed asset and sell it in bankruptcy. Instead of concealing assets trust in your bankruptcy attorney to apply state exemption law to protect your property.
In summary, do not conceal assets in bankruptcy. Your bankruptcy attorney has already given you the Section 342(b) notice and told you that you need to disclose all assets in bankruptcy, and that by concealing assets you may be committing a bankruptcy crime. Instead of trying to get one past the bankruptcy Trustee, trust in the bankruptcy process and your bankruptcy attorney to achieve a fair and equitable result in bankruptcy.