Thursday, September 1, 2011

Asset Disclosure In Bankruptcy

If you are a do-it-yourself type of person, and decided to file bankruptcy on your own, make sure you provide complete disclosure within your schedules. One of the more frequent questions I receive during consultations is whether or not they need to disclose all assets, and if they don't, how would they ever find out.

Keep in mind, that's the job of the trustee, and I'm not about to second guess his or her ability to find assets that have not been disclosed. Every trustee has a story that could be made into a movie.

The United States Trustee Program takes the hiding of assets very seriously. In 2009, 1,611 bankruptcy and bankruptcy related cases were referred to the United States Attorneys' offices for investigation and prosecution. And 2009 was not to be outdone by 2010 when 1,721 cases were referred. The trustee in your case has a statutory duty to refer cases, and the United States Attorneys' office has a statutory duty to prosecute actions that “relate to the occurrence of any action that may constitute a crime”. Furthermore, the trustee has a duty to assist in the prosecution.

Of the cases referred in 2011, actions involving concealment were only outdone by actions of false oath. The other actions that round out the top 5 are Tax Fraud, Bankruptcy Fraud Scheme, and ID theft or the use of a false Social Security Number. Everyone that comes into my office for a bankruptcy consultation is given a required disclosure sheet, and then I read the following line I have prepared to them, “A person who knowingly and fraudulently conceals assets, or makes false oath in connection with the case shall be subject to fine, imprisonment, or both and all information furnished by you is subject to examination by the Attorney General”.

So, if you have a question as to whether or not to include something in your schedules and Statement of Financial Affairs, or to omit it, I highly suggest you include it. I have not seen anyone prosecuted for including too much information, as long as it is truthful.

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