Filing for a chapter 7 bankruptcy helps a debtor discharge debt and get a fresh start. The bankruptcy protection essentially wipes out most debts. However, when filing this repayment plan, you must list all your assets and liabilities in the paperwork. Failing to do so can land you into legal trouble.
Here we will explain the legal repercussions of hiding assets when filing for chapter 7 repayment plan.
Legal Repercussions of Hiding Assets Explained
Hiding assets means not divulging all assets in the Schedule of Assets section of the bankruptcy petition paper. Many debtors hide assets in various ways.
- Lying about the asset’s ownership
- Transferring of an asset to another person
- Creating fake documents to show the asset has zero value
Here are some of the things that might happen if you hide assets when you file for a repayment protection plan.
Reverse Decision to Discharge Debts
When hidden assets are discovered, the trustee may reverse the decision to discharge debts. The trustee may order to take back all or some of the debts up to one year after the discharge date.
As a result, you will still owe the debts that you wanted to discharge by filing for Chapter 7 repayment plan. In addition, you won’t be able to discharge these debts in subsequent bankruptcies.
The trustee may also order to sell the assets that you had tried to hide. The proceeds from the assets will be used to discharge the debts. Moreover, you will owe any debts that are left over after that. In this way, you may lose ownership of your personal assets such as your house or a car.
When you file for a bankruptcy protection, you state that all information is true and accurate. In case hidden assets are discovered, later on, you could face a criminal conviction for committing bankruptcy fraud. This can result of imprisonment of up to twenty years, a fine of up to $250,000 or both.
An exception is when you had made a genuine mistake when filling the paperwork. The trustee would understand if you are able to convince him that you had no intention of committing a fraud. For this, you need to hire an experienced bankruptcy attorney. A bankruptcy lawyer will help convince the court that no deception was attempted and that assets were not divulged due to confusion when filling the paperwork, if that is the case.
You should talk to an experienced bankruptcy lawyer before you file a Chapter 7 bankruptcy protection.
Attorney Eli Tamkin is a Cleveland bankruptcy lawyer. He has been practicing law since 1989 and in Cleveland Ohio since 1994. Since then, he has dealt with a variety of legal issues, including bankruptcy, real estate, divorce, personal injury, and probate. Many times, answering questions on bankruptcy draws on knowledge of other legal areas as well. His experience in these other areas, as well as in bankruptcy enables him to address your particular needs and to offer you advice that is applicable to your situation.