You might think that cleverly forgetting to list an asset when you file bankruptcy can be a good thing. Not so, according to Patrick Kavanagh, a bankruptcy attorney who runs the Law Offices of Patrick Kavanagh, P.C. in Bakersfield, California. You can be done for fraudulent transfer, and you can end up losing even more.
If you fail to list assets, any number of bad things can happen to you. In certain circumstances, if it’s a big enough asset and an egregious enough failure to list, you can have your discharge denied. In terms of getting rid of the debt, it’s like the bankruptcy was never filed, but the trustee can still sell off your assets. So it’s like the worst of both worlds.
The failure to list an asset can prevent you from exempting an asset. In other words, there are cases that say that if you fail to disclose an asset, you lose your right to keep it.
Lose Credibility
And if you don’t list bankruptcy assets, you will lose credibility with the trustee, which will make them look harder at your other assets. In truly egregious cases, here there are substantial assets and there is good reason to believe you knew about them before you filed, you can be criminally prosecuted. That is not forgetting, but where you don’t list a Porsche in your garage, for example, you can wind up with a criminal prosecution.
When I was a bankruptcy trustee, not a week went buy when I did not get a phone call from a creditor, and often they had things to report. And ex-spouses line up to call. So don’t think you can get away with convenient forgetfulness.
Fraudulent Transfer
The bankruptcy word for “gift” is “fraudulent transfer.” If an asset is transferred, you lose your right to exempt it. Often people decide to gift assets, and as a result, they lose them. If they had not gifted them, they would have been able to keep them. But by gifting them, the assets get sold for the benefit of the creditors.
This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Publication of this article and your receipt of this article does not create an attorney-client relationship.
