by Adam Mack, J.D.
Hillary Stirling, research assistant
THE SCENARIO
A person in a tough financial situation decides to file bankruptcy but misrepresents (or lies) to their attorney about their assets in an attempt to conceal those assets from the court.
WHAT COULD GO WRONG
There are two major problems with lying to your attorney: he or she can’t protect assets they don’t know about and lying about your assets very well could result in jail time.
I know of one bankruptcy filer who had a bank account in a different state and lied to his attorney by neglecting to tell him about it. During the course of the bankruptcy proceedings, the trustee found the hidden bank account and the person who filed bankruptcy lost the several hundred dollars that she had hidden away. The worst part was that, had the attorney known about that concealed bank account, he could have directed the filer spend that money on something useful and exempt (such as needed car repairs or groceries) that benefited her directly. Instead, that money ended up in the pockets of the filer’s creditors.
Another case I’m aware of involved a bankruptcy filer who owned two pieces of real estate in addition to his primary residence. When it came time to file, he failed to disclose those two extra properties. A third party contacted the attorney and made him aware of the real estate. That filer lost both properties and could face jail time.
That brings us to the second reason lying to your attorney is a bad idea. Besides the loss of money or property, you can lose your freedom. Your bankruptcy petition is public record, and if you have a vindictive ex, in-laws, parents or former friends who have an ax to grind, they can call the bankruptcy court and report any assets you’ve failed to disclose. This happens more often than you might think! In fact, it’s so common that “Report bankruptcy fraud” is one of the main options on the phone tree available when you call the bankruptcy court.
Bankruptcy fraud is a federal crime, and if you’re convicted of committing it, you could do time in a federal prison. It’s just not worth it to lie on your bankruptcy petition!
THE MOST IMPORTANT PART
People file bankruptcy because they want to protect their property. Everyone wants to maximize their rights under the law, but you need to partner with a qualified Kansas bankruptcy attorney to know where those limits are. Contact us today for a free consultation.
Disclaimer
These articles are for general informational use and do not constitute legal advice. Since laws change over time, it’s possible some articles are out of date and for that reason, we make no representation that the articles are fully accurate. For actual, up-to-date legal advice (including a free consultation), please contact us!
