While bankruptcy offers a myriad of benefits to debtors, dishonest debtors ruin their chances of getting a fresh financial start. When filing for bankruptcy it is important to tell the truth at all times. Telling lies or distorting the truth can land you in a lot of trouble. Below are a couple of common lies dishonest debtors tell during bankruptcy and why you should avoid them.
Some dishonest debtors fail to disclose property and assets that they have in the hopes that the bankruptcy court won’t find out about it. The truth is that every property and/or asset leaves a paper trail, even cash. So if you have hidden cash someplace and you’re living a $100,000 lifestyle on $50,000, the bankruptcy court may become suspicious as to where all that extra money is coming from especially if it’s not accounted for in your incurred debt.
Some dishonest debtors may hide real estate property by transferring the property to relatives or friends before filing bankruptcy. The bankruptcy court will demand that you disclose any asset transfers made before filing bankruptcy, including the transfer of real estate to family and/or friends. If you fail to disclose this information you could face a dismissal of your bankruptcy case. Also, if you transfer property to someone else before filing bankruptcy, the bankruptcy trustee could demand that property be returned to the bankruptcy estate. The same rule applies to other assets such as cash. If the transferee fails to surrender the property to the bankruptcy court, they could face legal trouble.
Remember, failing to tell the truth during bankruptcy could cause your bankruptcy discharge to be denied or it could cause you to be fined, charged the bankruptcy fraud or imprisoned.