One of the stars of “Real Housewives of New Jersey”, Teresa Giudice, and her husband Joe, recently plead guilty to concealing assets in their bankruptcy case and now face up to 46 months in jail.
So what can we learn from a “real housewife”? Don’t try and hide assets in your bankruptcy case.
You Must Disclose All Assets in Your Bankruptcy
Every now and again I will file bankruptcy for a family only to learn after the fact that they had an asset that they didn’t tell me about.
I understand why people don’t disclose assets – they are afraid they will lose the asset. But here is the thing…there is no quicker way to lose an asset than by trying to hide it from your bankruptcy trustee. Most of the time we can protect all of your assets through Arizona’s exemption laws.
However, if I don’t know about the asset, and I file your bankruptcy case, my hands are tied at that point. By trying to conceal an asset you put yourself in the way of real harm. Concealing an asset in bankruptcy is a felony. And as the “Real Housewife” is learning, it is dead serious. The federal government really does prosecute bankruptcy crimes and people really do go to jail.
Why Is It Such a Big Deal?
Couple reasons. First, the entire bankruptcy system is based upon honest and complete disclosure by the people going through the bankruptcy process. Many times I am asked by clients if someone from the bankruptcy court is going to come to their house to take an inventory of assets.
The answer to that is no (at least I have never seen it happen). The bankruptcy trustees who administer bankruptcy cases simply don’t have time to go to everyone’s house and check off what they do and don’t have. They rely on you being honest in your disclosures to make the system work properly.
Second, a little over a month into your bankruptcy case you will attend the Meeting of Creditors. At this meeting you will be put under oath and asked by your bankruptcy trustee if you have disclosed all of your assets.
If you answer “yes” but are really concealing an asset you have not only committed a bankruptcy crime you have now also committed perjury.
What If I Have Filed My Bankruptcy and Forgot to Disclose an Asset?
Sometimes people simply forget they own something and don’t remember until after the bankruptcy case was filed. If this happens, then what do you do?
Amend the bankruptcy documents to disclose the asset. The sooner the better. If there is an honest mistake that has been made and you take action to correct your filing with the court then typically you won’t run into any difficulty.
But if you wait until the bankruptcy trustee discovers the hidden asset (and they will discover it) the you are much more likely to run into problems, including the denial of your bankruptcy discharge and even criminal charges.