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Let's be honest: disclosure is important in bankruptcy

Earlier this month, a federal grand jury indicted a man with bankruptcy fraud. The charges were based on a failure to disclose to the bankruptcy court an inheritance that was valued at approximately $800,000. In this case, prosecutors claimed that it was more than just a momentary lapse of judgment. They argued that it was an intentional scheme.

The potential sentence, if he is convicted, could include a five-year term of incarceration in a federal prison for the single count of bankruptcy fraud. In addition, the man faces 10 years for a single count of money laundering and five for each two counts of making a false statement and single count of fraudulently concealing assets. The report was unclear if the sentences would run concurrently or consecutively.

This is a lesson anyone reading our Arkansas criminal defense and bankruptcy blog can and should take to heart. Most people are uncomfortable discussing private details about their finances and other aspects of their personal life. Some people are afraid of losing their assets in bankruptcy. Failing to disclose assets can lead to criminal charges. It does not in every situation, but full and honest disclosure is crucial to any bankruptcy case.

Your bankruptcy attorney cannot help you get out of debt unless he or she has a complete picture of your finances. What chapter is best to file under for bankruptcy? How should you best utilize your exemptions? Do you qualify under the means test? Will you have to sell any assets? These are just the start of questions that your attorney can answer only based on a full understanding.

Source: Channel 3000, “Middleton man accused of hiding assets during bankruptcy,” Paul Graves, March 10, 2015

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