Many who notice the signs of bankruptcy opt for restructuring their financial situations. Discharging debt through bankruptcy can be a smart way to handle insurmountable debt. In many cases, bankruptcy stops the onslaught of creditor harassment and wage garnishments.
Many individuals find that bankruptcy gave them back a sense of freedom and autonomy they had long been missing. Further, bankruptcy has allowed many to keep their homes and cherished possessions. Filing for bankruptcy offers many advantages.
At the same time, there are certain actions you should avoid when taking this step. For example, you do not want to make the mistake of hiding assets in bankruptcy. Doing so may land you with serious and regrettable repercussions. Filing for bankruptcy should be a smart and rational decision to help you get back on track. Hiding assets or income is neither of these things.
Hiding Income in Bankruptcy
In a sensational case that involved hiding income in bankruptcy, the star of the hit reality show Dance Moms declared bankruptcy after struggling with $350,000 worth of debt. However, the star failed to disclose her $755,000 worth of income during this process.
Once the presiding judge of her Chapter 11 bankruptcy case discovered this, she was in hot water. In May of 2017, the star received sentencing of one year and one day in federal prison. The star was also sentenced to a 2-year supervisory period upon her release from prison. She will also have to pay a $120,000 money judgment and a $40,000 fine for her fraud.
More Penalties for Hiding Assets in Bankruptcy
While the above is a good case in point for not hiding income in bankruptcy, there are more penalties one might face for doing so. Each bankruptcy case is different in terms of one’s debt, income, and assets.
Further, the bankruptcy process will differ in terms of location, presiding judges, and legal representation. This means that each case of hiding assets or income in bankruptcy will incur different penalties.
As we have seen in the example above, federal prison, supervisory periods, and fines are all possible. However, other cases may result in an inability to discharge debts and the liquidation of personal assets. Trustees can also revoke debts discharged during bankruptcy if fraud is later discovered. Future attempts to discharge debts listed in the first bankruptcy will also get denied.
Let Our Bankruptcy Attorneys Help You File the Right Way
Our hope with this post is that the reader will come away better informed about their choices. Bankruptcy can be a real life-saver for those struggling with insurmountable debt. However, defrauding the system is never a good idea. Bankruptcy should get you out of bad situations, and not make them worse!
As FBI Special Agent Robert Johnson noted in regard to the Dance Moms case, bankruptcy is for “honest individuals overwhelmed by debt resulting from any number of legitimate reasons.”
If you are one of these individuals struggling with legitimate debt, we encourage you to speak with our Kansas City bankruptcy attorneys. We have years of experience helping clients file for bankruptcy the right way. Give the Sader Law Firm a call today at (816) 281-6349.