Everyone makes mistakes and forgets things. However, a Chapter 7 bankruptcy trustee will more than likely not accept either excuse when it comes to disclosing your assets. If the trustee and the judge determine that a Florida resident attempted to hide assets that would not fall within an exemption, he or she could be denied a discharge, which means that the filer would be responsible for all of the debts that the bankruptcy might have eliminated.
A couple that one bankruptcy judge considered to be “sophisticated” due to their education levels and the fact that they were familiar with the bankruptcy process were recently denied a discharge for hiding assets. The couple made a combined income of nearly $575,000, yet their schedules indicated a home with a low value and little personal property. To get to the bottom of the mystery, the trustee arranged a “surprise inventory” of the couple’s property at their home.
Jewelry, firearms and artwork were found in the home, but not on the couple’s bankruptcy schedules. Further investigation revealed sales of firearms within the months before and after the filing of the petition, including one that sold for $23,000. An auction was held, and many items sold for a total of $60,000. In addition, the court admonished the couple for what was characterized as fraud and did not allow them to discharge their debts.
Even if a filer forgets to list an asset on a schedule in a Chapter 7 bankruptcy, it would be best to inform the court about it as quickly as possible. A trustee and judge might understand an omission, but the longer a filer waits to come clean, the worse it will look. No piece of property is worth jeopardizing the fresh financial start that filing for bankruptcy can provide a Florida resident.
Source: bna.com, “‘Sophisticated’ Ch. 7 Debtors Who Concealed Assets Can’t Wipe Out Debt”, Diane Davis, Dec. 16, 2016