Why You Don’t Hide Assets During Bankruptcy in New York
Hiding bankruptcy assets is a bad idea!
It’s important to understand why it is such a big deal why you should not hide assets during bankruptcy is due to the fact that you need to do bankruptcy filing in a federal court. So, when a filer is making representations to the court and its bankruptcy trustee, the filer is under federal law.
Among any other laws included in the federal code is a very powerful one known as a false statement crime. This is where a party knowingly lies or makes an intentional omission to a federal officer.
The penalty is severe; it can include both a very hefty fine of up to $250,000, as well as incarceration of up to 20 years in federal prison.
It’s daunting to know the penalty. That’s why expert bankruptcy attorneys in Ursulova Law firm are here.
Bankruptcy in New York
Bankruptcy is a proceeding that is to be fully open and transparent.
The reason is, that the court and the creditor parties involved want to know that all the assets and potentially saleable holdings of the party are complete. Ideally, such assets are at least partially liquidated offset the losses of the creditors who will then see their debts wiped out by court action, essentially letting the filer off the hook for paying those debts.
However, it’s not fully possible or doable for the court to satisfy the remaining debts pay if the filer lied to the court or the filer has hidden assets from the court’s knowledge.
This is why, during the bankruptcy proceeding and the court trustee’s examination, the filer goes through extensive documentation and a sworn statement that he or she has been completely truthful in identifying all remaining assets owned, coming due to their possession or in their interest that the court can use to reduce related outstanding debts.
Trustee Hiding Assets
Commonly used in recent years, someone will try to hide assets like:
- Gold coins
How Does a Bankruptcy Trustee Find Hidden Assets?
Trained court trustees root out hidden assets. They have a number of tools at their disposal that they use to find signals of hidden assets, including everything from public records to credit history statements.
These are the common methods how do trustee find assets?
- Tax returns
- Bank records
Note: More recently, federal officers have become quite adept at figuring out how to search blockchain records for cryptocurrency transactions, again usually tipped off by bank records transferring fiat money to crypto exchanges and spouses who were aware of the activity.
- Tips (from disgruntled spouses, coworkers, and business partners)
- Social media (filers’ own social media with ill-timed photographs)
These complicated methods have done how a bankruptcy trustee finds hidden assets:
- Getting a relative or friend – only onto funds or assets until the bankruptcy is over, hoping the court trustee won’t find out and claw back those assets as well in the filing proceedings.
- Fake loans – a more complicated method seen has been the use of fake loans to give the appearance that the asset in question has no value, already compromised by debt, so it is not for sale.
- Fake mortgages or liens – are usually applied to owned real estate.
Trustee Hiding Assets Penalties
In addition to the criminal charges possible for lying to the court that includes both a very hefty fine of up to $250,000, as well as incarceration of up to 20 years in federal prison – the bankruptcy filer may also experience:
- Case dismissal.
- Any dismissed debts are again – owed.
- Unallowed to come back to the bankruptcy court and file again at a later date for those debts.
Honest Mistakes in Listing Assets in Bankruptcy Filing
However, it is possible that a person can legitimately forget about an asset or interest in an asset when going through the stress of a bankruptcy filing. Examples can include:
- annuity payments
- lottery winnings
- lawsuit judgments that come through unexpectedly
- being the beneficiary of a will or trust,
- irregular income payments or gifts from relatives
In these cases, the filer is now exempted to the extent the asset is immediately declared in paperwork with a logical explanation. Most Brooklyn bankruptcy lawyers note it’s ideal that the filer makes the correction instead of someone finding it in a review.
Brooklyn Bankruptcy Lawyer
Like many legal proceedings, going through bankruptcy alone is a bad idea.
It’s highly advised that a filer works through an expert bankruptcy attorney like Ursulova Law to avoid critical filing and reporting mistakes in the first place. A good Brooklyn bankruptcy lawyer will work to use every exemption and defense possible, as well as make sure that the filed document is correct and complete. This helps protect a person from making a mistake with the court trustee as well as navigating the bankruptcy proceeding successfully.