Hiding Assets When Filing for Bankruptcy
It is never a good idea to try to hide assets when you file for bankruptcy. In exchange for having your debts “discharged” or wiped out, you must disclose everything you own and all your debts on your bankruptcy papers. If you do not fully disclose your assets, you won’t be entitled to a discharge. But this is just the tip of the iceberg – you might also be subject to criminal penalties, and won’t be able to discharge those debts in subsequent bankruptcies.
What Can Happen If You Hide Your Property?
If you fail to list some of your assets or property on your bankruptcy papers and the trustee finds out, here’s what might happen.
You won’t be able to discharge your debts. If you hide assets from the bankruptcy court, you are not entitled to receive a discharge. If you don’t receive a discharge, you will continue to owe all of the debt that you were trying to get rid of by filing for bankruptcy.
You could face criminal charges. Even worse, you could be charged criminally. You sign your bankruptcy schedules listing your assets under penalty of perjury, representing that they are true and accurate. The penalty for making a false statement or concealing property is a fine of up to $500,000 or imprisonment for up to five years, or both.
Is real estate in another country subject to U.S. bankruptcy law? Must accounts held outside the U.S. be declared in a bankruptcy petition? Can foreign assets be shielded from domestic creditors?
The short answer is that all wealth, including international assets, must be listed when you file for bankruptcy.
Failing to list international assets is not the way to protect them. Such a tactic would probably backfire, drawing additional scrutiny of your bankruptcy filing. Your bankruptcy petition could be dismissed with prejudice.
Dick and Jane* own one-third interest in a Big Bear cabin, bequeathed to Dick through a family trust. The San Fernando Valley couple also owns a condo in Cabo San Lucas valued at $400,000. In their bankruptcy filing, the trustee does not exempt the condominium but declines to pursue their split interest in the Big Bear property.
*Dick and Jane are fictitious characters created for the purpose of explaining bankruptcy scenarios.