Thursday, May 3, 2012

Filing bankruptcy in Arizona: Can I hide any of my assets?

I am a bankruptcy attorney in Phoenix ($995/Chapter 7) and frequently clients ask me if they have to report everything they own. One potential client came in for a free consultation and asked us if he had to report $200,000 in cash he had hidden in a closet. Another client did not want to report her separated husband's vacation homes, since he was not filing for bankruptcy. A third client did not want to report that he may have some money coming to him in lawsuits and a patent on an invention.

I told every one of them that not to disclose assets in bankruptcy is a felony. Yes that's right, it's not just a no-no, it's a a felony punishable by huge fines and possibly even jailtime. Now some potential clients may choose to walk away, maybe even find another attorney and not disclose those assets to him/her, and hope to make it through the bankruptcy without the court ever finding out. I strongly advise against this. The federal bankruptcy courts have started cracking down recently, scrutinizing debtors very closely. The trustees have ways of finding property you have not disclosed. And it could be discovered in ways you never thought of. For example, what if you have cash hidden in a closet. The trustee decides to investigate your situation thoroughly, and asks to speak to your accountant. Your accountant, who may be put under oath, may disclose the cash to the trustee. Or the trustee may ask to speak to your separated non-filing spouse, who may disclose the cash, possibly not realizing you were trying to hide it.

There are ways to protect assets and that is why you should always consult with a bankruptcy attorney and disclose ALL of your assets to him/her. If you have a lien on your property, it is less likely the bankruptcy court will seize it during the bankruptcy. If you invest your cash in an exempt asset such as one house, or an educational savings account for your children, it will most likely be protected. If you are legally separated from your spouse, you probably do not have to disclose his separate property.

Do not lie to your bankruptcy attorney either! It is better to get everything out in the open right away so he/she can help you figure out how to protect your assets, rather than let your assets be discovered midway through the bankruptcy when it is too late to protect them.

The Alexander Bankruptcy Law Firm provides low low cost Chapter 7 and 13 personal bankruptcies. $995 Chapter 7 or $2500 Chapter 13 bankruptcies plus court filing fee. Free consultation with a compassionate attorney who will handle your case personally. Call 24/7, available to meet with you around your schedule. 602-910-6812. Conveniently located in Central Phoenix along the Camelback corridor.

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