QUESTION
Are there any legal ramifications if this does happen?
Asked on May 26th, 2017 on Bankruptcy - Oregon
More details to this question:
Wife and I financed a business that failed using credit cards etc. Business failed and we cannot pay the debt. Debt in her name, business in our name, and bank account in our name. Does the trustee monitor banking accounts after a discharge? Reason i ask is our business insurance company said we might be eligible for a refund for cancelling our policy? We are going to file in the next month.
7 ANSWERS
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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So, your question is "Can I get away with bankruptcy fraud by failing to list an expected insurance refund as an asset?" My answer to all bankruptcy fraud schemes is "if you think you've got troubles because you've got financial problems, wait until the FBI is prosecuting you for a felony. Then you'll look back to when you just had financial problems as being the good times." Don't worry, federal prisons are easy compared to state prisons, sometimes the rapists don't kill you.
Answered on Aug 12th, 2017 at 7:18 AM
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The court can monitor bank statements but it usually doesn't. Your real questions is "What do I list on my bankruptcy?" The answer is you list in the asset section "possible refund for overpayment of insurance proceeds" so that you fully disclose that potential asset.
Answered on Aug 10th, 2017 at 5:49 PM
Typically a bankruptcy trustee only reviews bank transactions that occurred before the bankruptcy was filed. However, you are missing the point thinking that an insurance check coming to you after filing bankruptcy can be hidden. Insurance companies routinely check for a bankruptcy filing before issuing any checks. I have had cases where the check was sent to the bankruptcy trustee after the case was closed when the right to the check arose before the bankruptcy was filed. Guess what happens next in that scenario?
Answered on Aug 10th, 2017 at 5:49 PM
Bank accounts for personal and the business will be requested by the trustee. Any refund would become part of the bankruptcy estate unless you have a means to exempt these funds.
Answered on Aug 10th, 2017 at 5:49 PM
I would suggest you speak with the attorney filing your case. There is more to this then meets the eye.
Answered on Aug 10th, 2017 at 5:48 PM
Depending on what chapter of bankruptcy you file whether it's personal or business any monies received other than income within 180 days after filing the petition is subject to the trustees control and will be used to pay your creditors. If you file Chapter 13 any monies received other than income will be used to satisfy creditor debt until the chapter 13 case is closed. Intentionally hiding money from the bankruptcy court/trustee would be fraud.
Answered on Aug 10th, 2017 at 5:48 PM
Any refund you might be expecting must be disclosed in your bankruptcy filing. But you could wait until you receive the refund before filing, and then you would just need to be prepared to explain how you used it. An experienced bankruptcy attorney could help you find legal ways to shelter your remaining assets and avoid crossing legal lines into jailable offenses.
Answered on Aug 10th, 2017 at 5:48 PM