In exchange for discharging or wiping out debts, a debtor is expected to list all of his personal property. A debtor is anyone who files for Chapter 7 or Chapter 13 personal bankruptcy.
"Hiding assets" refers to the failure to list all personal items and property in the bankruptcy petition’s Schedule of Assets. It is considered bankruptcy fraud. If the bankruptcy trustee discovers the hidden assets, the debtor can face penalties for hiding assets in bankruptcy.
Many debtors try various ways to hide assets. The most popular ways involve:
- Transferring assets to someone else
- Lying about ownership of the assets
- Creating fake documents to make it look like the assets have no value
For example, a person filing for bankruptcy has hidden an asset if they transfer title of their car to another person or actively choose not to list the car on their Schedule of Assets.
When a debtor fails to list all assets, the bankruptcy may not be dismissed. However, he will have to turn over the assets to be sold to pay creditors. Other penalties include:
- Debts are not discharged. In other words, the debtor will still owe his debts. If the asset is discovered after debts were discharged, the trustee may reverse the discharge.
- Criminal charges. Hiding assets is considered perjury. When filing bankruptcy every debtor must swear the information provided is true and accurate. Penalties for concealing property is five years in prison, a $500,000 fine, or both.
In some situations, a debtor does not intentionally hide assets. For instance, you may have simply forgotten to list certain items. It is highly recommended that you contact a bankruptcy attorney if your have any questions or concerns about hiding assets. The attorney will discuss penalties and what can be done to avoid them.