Tuesday, June 5, 2012

What Do I Need To List When Filing Bankruptcy?

Filing Bankruptcy; do you need to list everything? What if you don't want to bankrupt your favorite credit card? Those questions are generally followed by not wanting to disclose a transaction recently consummated. After all, how will they (bankruptcy court) know?

I promptly, and directly, explain to my client:
      1. the bankruptcy code requires complete financial disclosure, and
      2. the bankruptcy papers filed with the court are signed under penalty of perjury.
If you get caught, the Federal Court will ruin your day!  That's right, they will make an example out of you.  I do not want my name associated with such activity.  This can lead to criminal sanctions; perhaps you have heard of something called "Fraud"; this is in addition to penalties provided within the bankruptcy code and rules.  Sometimes proper planning can accommodate my client's goals, but proper disclosure is a must.

Case in point. United States v. Turner (11th Cir., 2012).

In this case out of Alabama, Mr. Turner failed to disclose the receipt of an insurance check he deposited into a solely owned LLC, of which he was the only signatory on the account. He also failed to disclose his LLC.

A jury convicted Mr. Turner of one count of bankruptcy fraud, and four counts of making false entries in his bankruptcy filings with the intent to impede, obstruct or influence his bankruptcy case.

He was sentenced to 27 months incarceration, followed by 3 years of supervised release, and payment of $28,500 restitution and $500 special assessments.  As of the writing of this blog, one count, Count 6, was vacated on appeal, and the case has been sent back to the lower court for resentencing.