Hiding assets during bankruptcy is an easy way to end up behind bars. Anyone considering hiding assets should look up a recent example of Joe and Teresa Guidice, who received prison sentences for concealing assets and engaging in fraud before and during their bankruptcy filing. The reality of the matter is that bankruptcy is a means of ridding yourself of debt legally and legitimately.
How Do People Hide Assets?
One common method is the hiding of assets by giving or selling them to friends or family. This is illegal. Courts and lawyers are aware of this practice as it seems like it may be a clever way to bypass the law, because you will no longer be in possession of the assets you’ve given away. However, this willful giving away of assets to friends or family to avoid potentially losing assets to a creditor is considered a fraudulent transactions requiring reimbursement. The bankruptcy trustee can also sue your friends and family to regain the assets or money.
Other ways people hide assets is by lying about the possession of or destroying assets. Moving assets to other bank accounts or property or falsifying information to make it seem like the assets are of little or no value.
Additionally, people have been known to ask their lawyers how to hide assets. Any lawyer who agrees to hide assets does not understand their profession and will not be long in practice, and could end up in hot water along with the client.
Lastly, failing to list an asset can sometimes get you in trouble for hiding it. This sometimes occurs accidentally; therefore, it is important to know all of your assets. If you make an honest mistake by forgetting an asset, you must act immediately and report the asset you forgot.
How Do Courts Find Hidden Assets?
- An ex parte (one-sided, meaning you would not know about it) order could be granted to search for hidden assets.
- The transactions when assets are moved from a person to another are generally very easy to track. As most transactions are digital and recorded, it is clear when and how much of something was moved out of the account.
- Hidden assets can be found by reviewing such things as your debts, tax returns, payrolls, bank records, from the reports of other people who know you and from other methods.
What Happens If You Are Caught Hiding Assets?
- The disclosing of all assets is mandatory; therefore, you could be punished for a premeditated criminal act if you attempt to hide your assets.
- The result for hiding assets is also a denial of the discharge of your debts. Joe and Teresa Guidice was denied a discharge of over $13 million, most of which may have qualified for discharge, had they been open and honest throughout the proceeding. They will now remain legally liable for those debts.
- It will be noted on your criminal record and your credit report.
- It is a violation of Federal Law. You could be looking at sentences and fines around 5 years in prison and a $250,000 fine.
- Reimbursement of gifted assets.
- Serious repercussion can occur for hiding even the most minor assets.
Honesty Is The Best Policy in Bankruptcy and All Court Proceedings
If you are afraid of losing assets to a creditor during bankruptcy, then you should pick an experienced lawyer who understands the ins and outs of bankruptcy and who has been practicing in this area for a number of years. If you want to get the most out of your debt situation, contact a Washington DC bankruptcy attorney to learn about your options for Chapter 7 or Chapter 13.