Why You Shouldn’t Hide Assets From The Bankruptcy Court?
Clients frequently ask our attorneys the same loaded question: “How will the trustee know about XYZ asset if we don’t mention it in the case?” The short answer is that the trustee probably won’t know …
This question poses a particularly complicated problem for your attorney. Despite what you may have heard to the contrary, attorneys are human, and surprisingly, we have a conscience. Like all humans, we can be equally capable of suppressing our conscience by justifying wrongful behavior. After all, we like you, and we hate credit card companies. However, we also have a sworn duty as an officer of the Court to present only the truth, and we take that duty very seriously. Disclosures are mandatory, and we don’t get the chance to sidestep the responsibilities.
Therefore, our attorneys typically answer the question as follows:
The trustee probably won’t know, but failing to reveal this asset or information is fraud and a federal crime. Don’t lose sight of the forest for the trees. Bankruptcy is an opportunity to wipe out most all of your debt and start fresh. It is not an opportunity to make a windfall profit, and you’ve got to make all of your required disclosures. The trustee does not want your engagement ring. He or she wants cash. Therefore, in almost every instance, you will be given the opportunity to ‘buy back’ your non-exempt assets over time at no interest. That money, when added to the cost of filing this bankruptcy, represents a small percentage of your overall debt.
Furthermore, this will likely be the only bankruptcy case you will ever file. The trustee has literally reviewed thousands of bankruptcy cases, and he or she is no dummy. If you get caught hiding an asset, the Court can deny your discharge of debts and report you for the crime of perjury. Proper disclosures protect your rights in bankruptcy court and make sure that you get the relief of debt that you are seeking.
Don’t take this wrong. We on your side! If there is a legal way to shield an asset from the trustee, it is a bankruptcy attorney’s duty to advise the client how to do it. This site and others across the internet extensively discuss how to legitimately reduce the trustee’s take and keep assets in your hands. We lawyers love pre-bankruptcy planning, and we pride ourselves on the ingenious ways we maximize the utility of bankruptcy. Just don’t ask us to cross the line.