What are the Consequences of Concealing Assets in Bankruptcy?
When you file for Chapter 7 bankruptcy, you are expected to reveal all of the assets that you have in your possession. The bankruptcy trustee in your case may take some of your nonexempt assets and sell them off to help make outstanding payments to your creditors. The temptation may be to sell these assets off yourself before filing your case, but this is a bad idea and could lead to you being charged with concealment of assets, a form of bankruptcy fraud.
Depending on the circumstances of how you make these transfers, the bankruptcy trustee might take the following courses of action:
- Get the property back to distribute it among your creditors
- Ask the courts to deny your bankruptcy discharge
- Suggest that your case undergo criminal investigation
Selling or giving away any property within a year of filing for bankruptcy could be considered an action with intent to defraud creditors. If you are found guilty of such action, courts can choose to refuse your bankruptcy discharge, which means you will still be responsible for paying back your creditors and all the debts that could have been forgiven through bankruptcy.
The bankruptcy trustee and investigators would need to be able to prove that you were transferring the property with an intent to delay or defraud creditors, or that you were selling property for less than reasonable value with intent to quickly pay back debts.
In general, the best course of action is to not attempt to sell off or conceal any assets if you are considering filing for bankruptcy. The trouble you could potentially face is nowhere near the short-term gain that you would get.
If you have more questions about Chapter 7 bankruptcy and other related issues, contact the experienced southern Maryland bankruptcy attorneys at Mudd, Mudd & Fitzgerald, P.A. today.