An Indiana man is headed to federal prison after attempting to hide assets from the bankruptcy trustee during his bankruptcy case. Regardless of whether or not you file for Chapter 7 or Chapter 13, you do have some obligation to the creditors. In the case of Chapter 7, they can liquidate any assets that you cannot protect. In the case of Chapter 13, you make monthly repayment over a fixed period. 

In most cases, an individual filing for bankruptcy does not have a lot of assets to protect. Creditors generally end up with nothing in Chapter 7. However, as part of the bankruptcy filing, you are required by law to divulge all and any assets you have. Your attorney then begins attempting to protect those assets from liquidation. You cannot hide assets in another state. You cannot transfer assets to a trusted friend. You cannot even repay debts to family members before filing because that is considered unfair to the creditors and constitutes a violation of the bankruptcy process.

In the case of hiding assets, the court can allege fraud, which is a crime of intent. Essentially, the government accused the defendant of intentionally hiding assets to avoid the liquidation process in Chapter 7. In this case, the man transferred assets to his girlfriend, who later became his spouse, in order to avoid them being liquidated during the bankruptcy process. He will spend 14 months behind bars as part of the plea arrangement. 

What Happened?

In this case, the individual transferred over $200,000 to his girlfriend and hid the transfer and the bank accounts from his bankruptcy filing. You are required by law to divulge any assets. Further, he transferred the title of a home to his girlfriend and then sold a boat, for which he transferred the proceeds to his girlfriend. All-in-all, that’s about $1 million in assets that were hidden by the bankruptcy court. 

Under the laws of most states, an individual with $1 million would not be allowed to file under Chapter 7 unless they owed several times $1 million dollars. Further, that money should have become part of the bankruptcy estate as the case was being settled. This individual decided he did not want to pay the creditors at all and still used the bankruptcy system even though he did not qualify. Ultimately, he wanted to divest his debts without repayment and defrauded the bankruptcy system to achieve this. 

In terms of bankruptcy, it is important to play by the rules and ensure that you are being honest with the court. Bankruptcy fraud is a serious offense, and prison time is likely. In some cases, individuals have bad blood with their creditors and refuse to pay no matter what. Ultimately, the creditor still wins if you lie to the court.

Talk to an Indiana Bankruptcy Attorney Today

With financial insecurity on the rise and more families living check to check, bankruptcy is becoming an option for more Americans. Call Chris Arrington today to schedule a free consultation, and we can begin discussing your options immediately.