Bankruptcy and the Unknown Asset

Article from BLN

Bankruptcy Fraud is a Federal Crime, and not something to be taken lightly. I know it is frustrating having to deal with providing all the information your attorney asks for, but I assure you that it is done for your protection. When they choose to seek protection from creditors by using the bankruptcy laws, debtors are required to provide accurate information on the petition.

First and foremost, filing bankruptcy without having all the information you need could get you into a lot of trouble or complicate your case, depending on the circumstances, why, and how it is done. You don’t want your case to turn into a train wreck, but sometimes you don’t have a choice.

If someone is tempted to list the property as unknown because they simply don’t want to go to the trouble of finding information, they might just find themselves having to explain why they did it to a judge.

Listing something as unknown is not something you should so without making every attempt to get the answers first. You should be as forthright as possible, be prepared to hand over the property to the court for liquidation to pay your debts, and it is not something you should do it without discussing with your bankruptcy lawyer

This can also depend on the type of case that is filed. Chapter 7 trustees take control of property that is the debtor can’t keep, and they sell it to pay towards the debts.

Chapter 13 trustees don’t ordinarily take and sell a property. In Chapter 13 bankruptcy cases, the debtor is ordinarily the one who will retain or sell the property. That means that the debtor might be required to come up with a plan, find value, or figure out how to sell the asset – even if it is difficult to do.

Once the case is filed, you can’t easily turn back if you find out that you just handed over something that could have paid off your debts in full. I don’t normally recommend giving up a property without having a general idea of what you are giving up but how much you owe, what protection are looking for with the bankruptcy filing, and what benefits you get are all factors to weigh.

So even if you aren’t quite sure of values, disclose as much as you can, know what your goals for filing are, and know what you are giving up. Provide as complete and accurate information as you can to increase the chance of a quick and smooth journey through bankruptcy.

Carolyn Secor is a Clearwater bankruptcy attorney and Clearwater foreclosure attorney serving Palm Harbor, New Port Richey, Oldsmar, Tarpon Springs, Seminole, St. Petersburg, and the Tampa Bay area.

If you would like more information on our practice, please consult our website at www.bankruptcyfortampa.com or call 727-254-1704.