When going through bankruptcy, it is imperative to ensure all assets are considered and the integrity of the process is secured. If, however, an individual seeking to complete bankruptcy hides any of his/her assets, he/she may face severe penalties.

The following are several ways people attempt to hide assets in bankruptcy proceedings:

• Lying about owning assets
• Transferring assets into another person's name or giving them to someone else to hold
• Creating fake liens or mortgages to make the assets appear like they have no value

Bankruptcy is similar to being under oath, which means it is mandatory for debtors to disclose all of their assets in their possession. Concealed assets or income, false statements, and lying to the authorities in bankruptcy matters all result in serious consequences.

If you fail to list some of your assets or property on your bankruptcy papers, and the trustee discovers it, here's what might occur:

1. No longer eligible to discharge debts. If you hide assets from the bankruptcy court, you won't be able to receive a discharge. If you don't receive a discharge, you will continue to owe all of the debt that you were attempting to eliminate by filing for bankruptcy.
2. You will still be in bankruptcy. Under the law, the property you are not allowed to keep will have to be turned over to the trustee and sold to pay your creditors. The only difference is that you will continue to owe any amounts that are not paid in full through bankruptcy.
3. The trustee can take back your discharge. If the trustee finds out that you hid assets after you obtained a discharge, the trustee can ask the court to “revoke” or take back your discharge. The trustee has the power to do this at any time before the case is closed or after the case is closed—up to one year after the date your debts were discharged.
4. You cannot discharge those debts in subsequent filings for bankruptcy. The debts that you list in any bankruptcy where your discharge was declined or revoked for hiding assets will also not be discharged in any subsequent bankruptcy filing.
5. You could face criminal penalties. Making a false statement or concealing property can result in a maximum prison sentence of five years and/or a fine of up to $500,000.

On the other hand, if you think you made an honest mistake and inadvertently leave something out of the bankruptcy schedules, you must immediately file papers to correct the error and disclose the asset. The bankruptcy court will not deny or revoke your discharge if the circumstances show that your failure to disclose the asset was not done with intent to defraud, delay, or hinder creditors.

If you are interested in filing for bankruptcy in Virginia, request a free consultation with our Richmond bankruptcy attorney at Bruce W. White, P.C. today.