A Palm Beach couple was denied a debt discharge last week for attempting to hide assets in their bankruptcy filing. Not only is the couple not going to be eligible to discharge their $2.9 million of debt, but they could face up to five years in jail and a $250,000 fine. When Is It Fraud?
A Palm Beach couple was denied a debt discharge last week for attempting to hide assets in their bankruptcy filing. Not only is the couple not going to be eligible to discharge their $2.9 million of debt, but they could face up to five years in jail and a $250,000 fine.
When Is It Fraud?
The bankruptcy court does not take kindly to debtors lying about information or making certain transactions prior to a filing. Accumulating large amounts of debt in the months before a filing can be considered suspicious and may lead to a case dismissal. Using false information, the information of another person, or misrepresenting your own identification information inaccurately is also likely to lead to a dismissal and possible consequences of fraud. When it comes to assets the court considers any lying or omission of information about the location or value of assets, giving away of assets, or sale of assets that is not reported on the petition or not sold at fair market value to be fraudulent.
What To Expect About Assets
Why do people lie about their assets? Often out of fear of losing them to creditors. What debtors should know is that there are laws that protect much of your property and valuables. Depending on your state, your property exemptions could be quite lenient compared to that offered under federal law. Bottom line is that the bankruptcy process isn't intended to strip you of everything, but you may find that third flat screen TV is liquidated. Here is a breakdown of exemptions in Indiana:
- Homestead exemption for property used as a residence up to $17,600
- Pension exemptions for tax exempt retirement accounts (including 401(k)s, simple IRAS), state or municipal employee funds, teachers and public service benefits
- Public benefits exemption for unemployment and disability benefits
- Insurance policy exemptions for life insurance policies
- Wildcard exemption for real estate or tangible personal property up to $9,350
If you are considering filing for bankruptcy in Indiana, consult with an attorney to ensure the maximum protection of your assets while you work towards a debt discharge.