04 Oct 13 Tips From The FBI Before Filing Bankruptcy.
I wanted to share 13 tips from the FBI before filing bankruptcy. I often tell clients that lying to the court is a crime called perjury, but often they do not believe me. So many times you will hear of stories of debtors who filed bankruptcy and did not disclose assets such as a boat, land or collectibles. These debtors often got away with discharging the debt and keeping the asset. Notice that I specifically identified the past tense in that sentence. The days of playing hide and seek with assets or creditors in bankruptcy are long gone.
These stories make it incredibly difficult to convince the client that they must list all their assets and all their debts. So please allow me to share the 13 tips as I want to make it perfectly clear that lying on your petition or schedules can land you in prison.
Here are 13 tips to keep in mind before filing for bankruptcy:
1. All creditors must be listed, even the ones you intend to pay after the case is filed.
2. Many assets are protected from being seized by the bankruptcy court, but only if they are listed. It is a crime not to list all property.
3. Part, or all, of any tax refund due for the tax year a case is filed may be required to be turned over to a trustee. Any refunds that are due for previous years may be required to be turned over.
4. You must list all business information if you are self-employed. If you are in business you must list all personal and business debts, assets and income.
5. All income must be reported, including Social Security benefits, family support, alimony, unemployment, and pensions.
6. Intentionally incurring debts with the intent not to pay may be a crime.
7. You should maintain payments on all secured property that you wish to keep that could be repossessed before the case is filed. This includes house payments, car payments, furniture payments, equipment, and other items used as collateral.
8. The court may disallow a bankruptcy if you misrepresent any facts or otherwise lie on the papers filed in court for the bankruptcy.
9. Bankruptcy stops all bill collectors. Creditors, including tax collectors, are barred from attempting to collect any debt from you the instant the petition is filed. This protection is permanent for all discharged debts. Bankruptcy does not stop any criminal proceeding or government regulatory proceeding.
10. Bankruptcy does not clear up a credit report. It may be reported on credit reports for 10 years.
11. You cannot dismiss a Chapter 7 case without court approval. You can voluntarily dismiss a Chapter 13 case anytime.
12. A secured creditor may add the attorney fees they incurred to the balance owed on the property. This may happen even if you are not behind on payments at the time the case is filed. Most mortgages and other loan documents provide that reasonable attorney fees are allowed and will be added to the balance due on a loan.
13. Bankruptcy crimes carry a punishment by, among other things, imprisonment for up to five years. It is a crime to: conceal property from the court or trustee; knowingly and fraudulently make a false oath or account; knowingly transfer or conceal property to defraud creditors; conceal, destroy, mutilate, or falsify records or documents; and file a petition to deceive or defraud.
Every week I see more cases being sent to the U.S. Trustee to review for claims of fraud. Bottom line, do not lie on your voluntary petition. You may get away with it but is it worth taking a chance in committing perjury and paying a fine of $250,000 or spending 5 years in prison? If your answer is no then do not lie to your attorney. We cannot protect you if you lie.
Remember that knowledge is power and bankruptcy is not a game! The more knowledge you have about fraud and perjury the more power you will have to avoid bankruptcy crimes.