While filing for bankruptcy, it is mandatory for all filers to disclose their assets in their petition. It is extremely important that bankruptcy filers are truthful in their declaration and do not try to hide their assets. Some people have the opinion that if they hide their assets, those assets will remain secure and would not be taken away by the court during bankruptcy proceedings. However, probably unknown to them, they are committing perjury which is reprimanded by penalties, which in the long run may prove costlier to the filer.
Sometimes, without any malicious intent, a filer can make an honest mistake of not disclosing an asset. If that is the case, they should file immediately to disclose the asset to their bankruptcy trustee. If the mistake is genuine and not an attempt to delay the proceedings and default the creditors, the error will not reflect negatively on the judgment. As per lawyers of Los Angeles based law firm Recovery Law Group , there are a number of reasons why any asset may go undisclosed by a bankruptcy filer.
Some of these are –
Lying by the filer about possessing the asset
The asset was transferred by the filer to someone else’s name
Fake mortgages or liens were created by the filer to devalue the property
Simple carelessness on the part of the filer in disclosing assets
Legitimately forgetting to include any asset which they may not have thought of such as lottery winnings, retirement benefits, lawsuits, inheritances, trusts, and co-owned assets
Unfortunately for bankruptcy filers, the trustees appointed by courts to take care of the assets are very keen observers and investigators. It is foolish to hide assets from them as the discovery of such assets will spell things worse for you. A simple debt review, public records view, review of tax records or bank statements, or an online asset search can determine which assets are hidden or transferred.
If a filer has attempted to hide assets, they have to face a number of consequences due to such an action.
The actions taken against such activity include:
The hidden assets will not be eligible for discharge i.e. the debt they were trying to get rid of through bankruptcy will remain.
Their discharge may be revoked.
They might have to face criminal charges and penalties for perjury (punishable by up to 5 years of prison and/ or a fine of up to $500,000.
Since the repercussions of hiding the asset are far more severe than the respite you hope by concealing them, it is advised that you consult a good bankruptcy attorney when filing for bankruptcy and declaring your assets.