Filing bankruptcy in Houston and beyond requires potential Debtors to accurately and truthfully disclose all information concerning assets and liabilities. This information must be disclosed to the Trustee and creditors. In a Chapter 7 bankruptcy Debtors may have property that is considered non-exempt and would belong to the bankruptcy estate upon filing for bankruptcy relief. What is a Debtor to do with the property before filing? Sale it or allow it to be liquidated in bankruptcy for the benefit of creditors? If Debtors decide to sale property, they should be aware that the transactions need to be disclosed. The brief subject of this post is to stress that if Debtors do sell property before filing bankruptcy and conceal any proceeds of sale with the intent to hinder, delay, or defraud creditors, then Debtors could be committing bankruptcy fraud.
Recently the U.S. Attorney's Office in Houston, Texas indicted a Bastrop couple on charges of bankruptcy fraud. What did the couple possibly do in this case that was fraudulent? The U.S. Attorney is alleging that the Debtor (the husband) sold property pre-petition and did not disclose the transfers to the Trustee. In addition, it is alleged that the Debtor gave the proceeds to his non-filing Spouse in an attempt to conceal the money. The value of this alleged property is significant and amounts close to half a million dollars.
What is the effect of the Debtor and his wife's conduct? If convicted, a maximum of 15 years in prison, without parole, and a $250,000 fine.
Bankruptcy fraud in Houston and beyond is real and is subject to prosecution. Remember that full disclosure is required if you are filing bankruptcy. If you have sold any property recently and are considering filing for bankruptcy, consult with one of our Houston bankruptcy attorneys to determine the best course of action in filing a bankruptcy petition.