Thursday, October 1, 2009

Bankruptcy Crimes

Bankruptcy relief and a debt-free fresh start in life are the end-game of Chapter 7 personal bankruptcy filings. However, to achieve these goals, a bankruptcy debtor must tell the truth and disclose all of the debtor's assets. Further, a debtor must not hide or improperly transfer assets to a friend or family member in an effort to conceal these assets and save them from potential liquidation by the Chapter 7 trustee.
It is federal crime if a debtor does not tell the truth, does not disclose all of the debtor's assets, or improperly transfers assets to a friend or family member in an effort to conceal those assets.
Such was the case of Ronald Arthur. Mr. Arthur filed Chapter 7 bankruptcy to discharge various debts incurred over a period of time. Ronald claimed to have few assets to satisfy the various claims against him. The fact was, however, he had transferred, prior to the bankruptcy filing, assets not listed in the bankruptcy schedules to his wife. In fact, more assets were transferred to his wife after the bankruptcy petition was filed.
The trustee discovered the omission and improper transferred. The matter was referred to the U.S. Attorney's Office. Later, the matters were presented to a grand jury, which charged the debtor with various counts of bankruptcy fraud. The district court found that debtor had concealed his assets from both the trustee and the creditors in an attempt to have all of this debt discharged while retaining the assets.
Mr. Arthur was convicted of a crime and was sentenced to 54 months' imprisonment. Mr. Arthur appealed and the Seventh Circuit Court of Appeals affirmed the conviction on 9/17/09. See United States of America v. Arthur, Nos. 07-1052 & 07-1267.
The moral of the story.................. tell the truth, disclose all of your assets, don't hide or conceal any assets, and don't transfer any assets to a friend or family member in an effort to avoid the liquidation of those assets. Chapter 7 is a tradeoff: lose the dischargeable debts, but risk losing the non-exempt assets.

Warmest Regards,

Bob Schaller

Your Bankruptcy Advisor Blog
By: Attorney Robert Schaller (Bob's bio) of the Schaller Law Firm

Bob is a member of the National Bankruptcy College Attorney Network, American Bankruptcy Institute and the National Association of Consumer Bankruptcy Attorneys.

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