If the bankruptcy court has reason to believe that you were trying to commit fraud on the court when you filed for bankruptcy by either hiding assets or giving assets away prior to filing for bankruptcy, you could potentially face your bankruptcy proceeding being dismissed by the court. The court has the right to exercise discretion when it comes to dismissing fraudulent bankruptcy proceedings and will not grant debt relief when it feels like bankruptcy petitioners are trying to cheat the system. Although you may not feel like you are committing fraud by trying to protect your assets, the bankruptcy court views the situation differently and will not provide you with the debt relief you are seeking.
It might make sense to you that if you are preparing to file for bankruptcy you should figure out a way to shed your valuable assets in order to protect them from being liquidated by the court during bankruptcy. One way that people try and do this is through the transfer of assets to friends and family members. It might be a divestiture of stock to a nephew, or the transfer of real property to a spouse or parent, or it could be the gifting of a value of a vehicle to a close friend. But when any transfer of an asset occurs within the year preceding a bankruptcy filing, the court grows suspicious about the true intention of the transfer in question.
Is important to be honest and truthful about the assets that you own when you are going through bankruptcy proceeding. As part of bankruptcy you are required to give a thorough and complete accounting of all of the assets that you own to the bankruptcy court. Taking steps to hide or transfer assets in advance of bankruptcy is viewed by the court as being dishonest. In some situations if you try to hide or transfer assets for the purpose of fraud, you could potentially face criminal charges for your actions.
If you are considering filing for bankruptcy and you are concerned about the court liquidating all of your assets in order to repay your creditors, you should be advised that there are certain exemptions in bankruptcy law that will protect some of your assets from the bankruptcy proceeding. For instance, people seeking bankruptcy are allowed to exempt their personal home, which means that your home is protected from the bankruptcy court and your creditors. There are additional exemptions for certain values worth of property that can be excluded as well. Assets that are exempt from bankruptcy are protected from the bankruptcy. Exempt assets cannot be taken by the bankruptcy court and liquidated, i.e., sold for cash, in order to repay your creditors.
If you are planning on filing for bankruptcy, you should consult with an experienced Michigan bankruptcy lawyer at the office of Karen E. Evangelista, PC. Your lawyer will explain what you need to do to help ensure your bankruptcy is successful. You should not try to transfer or hide assets before filing. Please feel free to contact us today at 248-652-7990.