When you file for bankruptcy, you must disclose all of your assets. Even relatively minor assets can be used as grounds for denying your bankruptcy petition based on a false oath, which can result in your discharge being denied. People who fail to disclose assets they own can also be charged with concealing assets under federal law.
Can I Pay Friends And Family?
When a person files for bankruptcy, they may try to hide assets by giving money or property to friends or family members. As a result, their assets are not technically in their possession when they file for bankruptcy.
The courts know this practice, and paying friends and family before filing for bankruptcy may be construed as fraudulently transferring assets or as a preferential payment. A court can order that these payments be reimbursed. A Trustee (the person appointed by the court to oversee the bankruptcy) can pursue payments you made up to 365 days before you filed bankruptcy.
What Is My Liability if I Hide Assets?
Your discharge will be denied if the court determines that you have hidden assets. In this case, your entire bankruptcy petition is thrown out, and all your debts will be due.
According to the new bankruptcy laws, your Trustee will still administer your assets, and your non-exempt property will be used to pay your creditors. You are still liable for claims made by creditors who are not paid even after all non-exempt property has been liquidated. Creditors can use state law to collect unpaid claims.
When the government suspects you are hiding assets, bankruptcy can become a criminal case.
Bankruptcy fraud is charged under 18 USC § 157, making it illegal to make false statements in a bankruptcy filing and knowingly conceal assets or file a misleading financial statement in a bankruptcy petition.
Bankruptcy fraud involves filing a petition or document for bankruptcy protection to defraud creditors.
Furthermore, bankruptcy fraud charges can also be filed against individuals who make false claims, fraudulent representations, or false promises related to a bankruptcy proceeding.
A federal prosecutor can use several statutes to indict someone for bankruptcy fraud, including mail fraud, wire fraud, tax evasion, and identity theft. Each crime carries a separate sentencing range.
The judge could order you to pay restitution and forfeit assets you acquired through bankruptcy fraud, a felony punishable by up to five years in prison and a fine of up to $250,000.
If you face an 18 U.S.C. § 152 concealments of assets charge, you must speak to legal counsel immediately.
What Is Concealment of Assets?
Concealment of assets, false oaths and claims, and bribery under 18 U.S.C. § 152 is a federal felony charge prohibiting several types of behavior during a bankruptcy filing.
As soon as a bankruptcy is filed under Title 11 of the U.S. Code, it is criminal to knowingly and fraudulently:
- Hide property from a creditor or United States Trustee;
- Make an untrue oath or account related to a bankruptcy case;
- Falsify a bankruptcy declaration, certification, or verification;
- Falsely present any evidence or claim in a bankruptcy case;
- Obtain any material property from someone filing bankruptcy, so they don’t lose it;
- Offer, receive, or attempt to receive any money or property to help someone conceal assets in a bankruptcy;
- Fraudulently transfer money or property to another person or business to conceal assets in bankruptcy;
- Make a false entry in a bankruptcy record by concealing, altering, destroying, or falsifying information regarding the debtor’s property;
- Withhold recorded information about the property or financial affairs of the debtor from the court or any authorized officer.
If a person is accused of any of these acts, they can be charged under 18 U.S.C. § 152 of the U.S. Code with a federal felony. A combination of these acts can also result in multiple criminal charges.
Also, the United States Bankruptcy Code Section 523(a)(2)(A) prohibits discharging any debt obtained through false pretenses, representation, or fraud.
Your bankruptcy filing could be dismissed, and you’ll still be responsible for all the debts you were seeking relief from. Afterward, you will have to wait a certain amount before re-filing for bankruptcy.
What Are Related Federal Crimes?
The federal laws regarding the concealment of assets can be located in Chapter 9 of Title 18 of the U.S. Code regarding bankruptcy. Other crimes that can be found in this chapter are:
- 18 U.S.C. § 153 – Embezzlement against an estate is punishable by up to five years in federal prison and a fine;
- 18 U.S.C. § 154 – Officers who act adversely to the government may be fined, and their office forfeited;
- 18 U.S.C. § 155 – A fee agreement under title 11 or receivership may result in imprisonment of up to one year plus plus a fine;
- 18 U.S.C. § 156 – Knowingly disregarding bankruptcy law or rule is punishable by up to one year in jail and a fine;
- 18 U.S.C. § 157 – Bankruptcy fraud is punishable by up to five years in prison, a fine, or both.
Generally, these related crimes can be charged alongside concealment of assets charges or used to negotiate plea deals to avoid more serious charges.
The Federal Bureau of Investigation (FBI) and the Attorney General are also designated to enforce these laws, despite these being bankruptcy-related crimes.
What Are the Penalties?
18 U.S.C. § 152 concealment of assets is a federal felony that carries a max penalty of 5 years in federal prison and a fine by the court as set by the federal sentencing guidelines.
Other crimes within the same chapter of the U.S. Code that carry a 5-year maximum sentence include embezzlement against the estate at 18 U.S.C. § 153 and bankruptcy fraud at 18 U.S.C. § 157.
How Long Would I Have To Wait Before Refiling If My Bankruptcy Case is Dismissed?
If your bankruptcy petition is subsequently dismissed because you hid assets on your petition, you will have to wait before you can file again. Generally, you cannot be discharged of debt under Chapter 7 if you received a Chapter 7 or Chapter 11 discharge within the six years before the filing of this petition or if you received a Chapter 12 or Chapter 13 discharge in a case that paid less than 70% to the unsecured creditors and was filed in the six years before the filing of this petition. These restrictions do not apply to a previous Chapter 13 bankruptcy.
What Should I Do If I Acquire Property After Filing Bankruptcy?
You should inform the bankruptcy court if you acquire property after filing for bankruptcy. In cases under Chapters 7, 11, 12, or 13, a supplemental asset schedule should be filed to show any property acquired after the bankruptcy filing. You should file the supplemental schedule within 10 days of learning that you are acquiring the property. The court may grant an extension.
Each time you acquire additional property, you must submit supplemental schedules. In most cases, the property you acquire after filing for bankruptcy will not become part of your bankruptcy estate so you can keep it. Even if your debt has been discharged before these 180 days, you must notify the Trustee of any assets you acquire within 180 days of filing for bankruptcy.
Do I Need A Bankruptcy Attorney?
If you are considering bankruptcy, it is very important to understand the best ways to protect your assets without fraudulently transferring them. State laws vary regarding what actions are allowed to protect assets. An experienced bankruptcy lawyer can determine when to file for bankruptcy and how best to protect your assets.