In a bankruptcy setting, “concealment of property” refers to the act of a debtor dishonestly representing their assets to a creditor. Any action taken by the debtor that is intended to hinder or delay the efforts of creditors may be considered concealment of property. This may be done for a variety of purposes, but it is most commonly done to obtain a discharge of debt.
For example, some debtors may only be qualified for a discharge of debt if their overall assets are under a certain monetary amount. In an attempt to obtain a debt discharge in this type of situation, they may conceal some of their property to make it appear like they have less money. This is illegal, and doing so can result in negative consequences for the debtor.
Concealment of property can take a variety of forms. However, a common method is for the debtor to transfer their property in a fraudulent manner so that the creditor does not know that the debtor owns the property.
What Are the Elements for Proving Concealment of Property?
Criminal and civil laws pertaining to property concealment may vary by state and jurisdiction. However, a creditor who is claiming that a debtor committed concealment of property must generally be able to prove the following:
- The act was committed with the intent to delay, hinder, or defraud the creditor
- The act was committed either by the debtor themselves or a person authorized to be the debtor’s agent
- The act was committed within one before filing of the bankruptcy claim or petition for debt discharge
- The act consisted of removing, concealing, transferring, or destroying the debtor’s property
In addition, the debtor may be found liable even if they did not personally engage in the act of concealing their property. They can also be found liable if they knowingly allowed their property to be concealed, but did not take any steps to prevent the illegal act.
What Types of Acts Are Considered Concealment of Property?
Again, concealment of property often used interchangeably with the term “fraudulent transfer of property.” However, the term concealment of property is somewhat broader and does not always have to involve any actual transfers. For example, the following acts may be classified under the category of “concealment of property”:
- Falsifying an oath
- Falsifying documents or the contents of a bank account
- Failing to preserve record books
- Purposely altering record books to reflect a different statement
- Failing to explain any discrepancies, differences, or incongruities in account statements (such as losses of assets, missing income, or instances of insolvency)
Again, these acts must be committed with the intent to defraud the creditor. That is, accidental acts cannot be considered concealment of property.
What Are the Consequences of Concealment of Property?
There are a number of negative consequences associated with the act of concealment of property. First, the person may be held criminally liable, especially if the act involves government or state authorities. Criminal charges may result in penalties such as monetary fines, or a short term in jail.
Also, a person who is caught concealing their property may face other consequences, such as:
- Negative effects on credit history
- Inability to obtain loans in the future, especially with the lender that they had defrauded
- The lender may file a civil lawsuit against the debtor, which may results in the debtor having to pay damages and other costs such as attorney’s fees
Thus, concealment of property is dealt with very strictly and can result in severe penalties for the offender.
Do I Need a Lawyer If I Am Accused of Concealment of Property?
If you are currently dealing with debt, you may wish to contact a bankruptcy lawyer for advice. Working with a lawyer can help ensure that you file all documents in a way that complies with the laws of your state. Also, if you are currently accused of concealing property, an experienced attorney can help defend you in court. There may be a number of defenses available to you, such as a lack of the required intent.