July 23, 2019

Don’t Try to Hide Your Assets in Bankruptcy

I recently ran across an  article in the  St. Petersburg Times involving a person in a Florida bankruptcy case who scheduled very few assets in his bankruptcy filing but conveniently forgot to tell his attorney about $35,850 in an account that he owned. A sharp-eyed Chapter 7 bankruptcy trustee discovered the account. This resulted in the guy losing his account and being convicted of a federal felony.

Two words describe this guy, not smart.

When the smell arises, the digging starts

The scenario described above raise two thoughts in my mind.

The first involves my more than thirty years as a bankruptcy trustee. Vast experience has led me to the point of almost being able to smell a fishy bankruptcy filing. When the smell arises, the digging starts. Almost invariably, it will turn up assets that should have been disclosed. Lots of times, it is a matter of oversight. Sometimes, it is intentional. When it’s a matter of oversight, the assets are liquidated for creditors. When it is intentional, the assets are taken, and really bad things can happen to the offender. These include the loss of a discharge, the debts do not go away, or reference to the United States Attorney for possible criminal prosecution. In this time of great economic distress, a great deal of emphasis is being put on white collar crime including bankruptcy fraud.

The second thought that comes to mind deals with my representation of individuals filing Chapter 7 bankruptcy cases. I certainly want my clients to retain as much of their assets as possible. However, I cannot let a client step across the line and end up potentially facing a federal criminal prosecution. Sometimes the location of the line can be difficult to determine. Again, my years of experience are what I have to rely on in advising clients. I am aggressive in developing strategies designed to protect assets. However, none of my clients have ever had to face the music for being less than candid with the bankruptcy court.

When choosing a bankruptcy attorney, be sure you’re comfortable with the experience and expertise brought to your case.