What Is the Definition of an Asset?
An asset is generally considered to be anything of value that you own or can otherwise use to generate revenue. Items such as a car, a home or the furnishings inside of your home may all be examples of property that must be accounted for in a bankruptcy petition. If you still owe money on a home, car or other item, any positive equity that you have accrued can be considered a part of your estate.
Therefore, it will likely need to be accounted for during the process of seeking protection from creditors. It’s important to note that any cash that you have in a bank, brokerage or other type of account will need to be included as part of the property disclosure process.
Misstating the Value of an Asset Can Also Constitute Fraud
If you claim that your home is worth $100,000 less than it actually is, that would likely be seen as fraudulent. The same may be true if you claim that you only have $1,000 in a bank account when you really have $10,000 in your bank account. This is because you have made a materially false statement to the government, which may be prosecuted as either a misdemeanor or a felony. The severity of the charge will depend on the exact circumstances of your case.
Transferring or Depleting Assets Can Be Seen as a Bad Faith Move
Selling an asset just prior to filing for bankruptcy may be seen as an attempt to manipulate the law. Transferring an asset just prior to seeking protection from creditors may also be seen as a bad faith attempt to get out of paying a debt. Transferring an asset to a friend, family member or colleague may be particularly troubling to the government because you might still have some level of control over it. It’s not uncommon for individuals to sell a home, business or other items with the understanding that they will be sold or leased back to them when the time is right to do so.
Hiding Income Is Something to Avoid When Seeking Bankruptcy Protection
Hiding your income can easily result in a felony bankruptcy fraud charge. Generally speaking, you must tell the government if you have received wage, rental or any other type of revenue over the past several months or years. Your attorney will likely ask you to list any sources of income that you have to ensure that you don’t run afoul of bankruptcy laws.
What Happens If You Omit Something By Mistake?
It’s worth noting that you can only be convicted of bankruptcy fraud if it can be proven that you intentionally attempted to violate the law. For example, if you forgot to list income from a stock sale two years ago, it’s unlikely that you’ll be charged with a crime. However, it may still have an impact on your ability to seek a timely discharge of your debt.
In such a scenario, the case will be delayed or dismissed until you are able to file an amended petition. If you still qualify for a discharge, the case will typically continue as if the mistake had not been made.
An exception may be made in the event that you have had previous bankruptcy cases dismissed for any reason. In this scenario, you will likely have to wait at least 180 days until you can refile your petition, and there is a chance that the judge in your case will force you to wait even longer depending on why previous cases were dismissed.
If you are facing a bankruptcy fraud charge, it’s in your interest to seek the help of an attorney. This person may be able to review your case, prepare a defense and take other steps to help you obtain a favorable outcome in the matter.