Legally speaking, all of your assets need to be accounted for if you want to file Chapter 7 bankruptcy. This specific type of bankruptcy entails a court appointed trustee selling off all your nonexempt assets and using the proceeds to pay off the debtor’s creditors. There are certain regulations determining which particular assets a debtor can list as “exempt” when filing bankruptcy. So it is only natural that there is a history of debtors attempting to conceal or hide their assets so they don’t have to worry about losing them in bankruptcy.
The main reason why concealing your assets in a Chapter 7 bankruptcy is so tempting is that the debtor is relieved of any legal obligation to dischargeable debts that are left unpaid after liquidation. Bankruptcy courts and trustees alike are plenty aware of this and will come down hard on any debtor they catch concealing their assets.
Cause and Effect of Concealing Assets
One popular method that sneaky bankruptcy applicants pull is concealing their assets by temporarily giving questionable assets to friends and/or family. Then after the bankruptcy has been completed they take the assets back. If the court or trustee learns of this activity then they could dismiss the case or require reimbursement of the assets. Trustees can dispute payments made for up to a year after the bankruptcy has been filed.
It could be years before you’re eligible to file bankruptcy again if your case is dismissed as a result of concealing assets. Your bankruptcy attorney should be able to give you plenty of sound advice on concealing assets and why it should be avoided. The best method is honesty. If you acquire property that could be deemed questionable since it was obtained after filing bankruptcy then just make sure you disclose it with the court to avoid confusion. That way you can be sure you’re filing an honest bankruptcy and that way you can start your new financially honest life in no time.
