When you declare Chapter 7 bankruptcy, you are telling both the federal and state governments that you cannot stay financially afloat while burdened with all your debts and obligations. However, because bankruptcy is not a windfall, the process requires debtors to disclose all of their current assets. The disclosure allows the Chapter 7 Trustee assigned to the debtor’s case to determine whether the debtor owns assets greater than the allowable exemptions and liquidate non-exempt assets to pay down priority and unsecured debts.
Asset disclosure in a Jacksonville bankruptcy case is serious business. If you try to hide assets from your trustee or the Court, you could lose your bankruptcy discharge and face criminal penalties. Fortunately, a bankruptcy lawyer can help you comply with mandatory disclosures and ensure you do not accidentally leave anything out. Additionally, our experienced team can help you maximize the amount of property you can exempt from your bankruptcy proceedings.
Potential Consequences of Hiding Assets
The list of assets that a debtor submits with their Chapter 7 bankruptcy petition is considered a statement made under oath, and intentional dishonesty is considered perjury. Each individual charge of perjury for knowingly concealing certain assets, or transferring them to another with the intent to defraud, could be punished by a maximum fine of $500,000 and a maximum prison sentence of five years.
If a bankruptcy court finds that a debtor tried to hide assets, not only will a discharge be denied, but the Court could prevent the debtor from filing bankruptcy in the future. Even if certain debts have already been discharged, a later finding of fraud will allow the Court to revoke the discharge and reinstate those debts.
While federal perjury laws are strict and allow for harsh punishments, they do not punish people who make honest mistakes. If a debtor forgets to disclose a particular asset in their bankruptcy case, a local attorney will help them draft an amendment to their schedules and ensure that no significant consequences arise from this inadvertent omission.
Furthermore, liquidating assets or converting non-exempt assets to exempt assets on the eve of bankruptcy is usually permissible. It just depends on how the debtor does it, which is why pre-bankruptcy planning with a lawyer is critical to maximizing the utility of bankruptcy.
Alternative Methods of Avoiding Liquidation in Jacksonville
There are a few alternative approaches to liquidating all non-exempt assets that may allow a debtor to keep current assets without committing a federal crime. Perhaps the most straightforward option is filing for bankruptcy under Chapter 13 rather than Chapter 7, which would allow a debtor to keep most of their secured assets so long as they complete a repayment plan for the associated debts.
In some circumstances, creditors may be willing to work with a debtor on an individual basis to set up a payment plan or forgive certain debts. Debt consolidation may also be an option in other situations. Additionally, a certain amount of some assets, like home and vehicle equity, are exempt from bankruptcy proceedings in Jacksonville, so there is no need to worry about these types of property during asset disclosure.
Disclosing Assets Is Crucial to a Jacksonville Bankruptcy Case’s Success
If you want the Court to approve your bankruptcy filing, you will need to disclose all of your assets before filing your petition. Any dishonesty in this regard could have grave consequences, including the rejection of your petition and a possible federal prison sentence.
An experienced lawyer will quickly and effectively help you work through the asset disclosure process in your Jacksonville bankruptcy case. To find out how legal counsel could help you, call today.