Once you have decided to file for bankruptcy, you must be truthful about your financial situation in order to take advantage of bankruptcy protections. While this does not pose a problem for a majority of individuals, we occasionally encounter a debtor who seeks bankruptcy protection to secrete or hide assets.
The Trustee’s Role
When you file bankruptcy, expect that the trustee will perform a thorough investigation of your assets and your financial transactions for a year or more prior to the bankruptcy. If the trustee determines that you have sold or given away valuable items before filing for bankruptcy protection, this can cause your case to be dismissed.
If this happens, you will have to re-file and may not benefit from the protection afforded by the automatic stay which means that creditors will be free to pursue their collection attempts. Debtors who attempt to hide assets may be guilty of fraud, therefore, it is important to disclose any and all financial activities in your initial petition.
Be prudent in timing your bankruptcy petition
Despite innocent intentions, certain actions may require that you to have to wait in order to file for bankruptcy in order to avoid dismissal. For example, if you have recently sold or given away valuable property, you may have to wait for a year before you file for bankruptcy protection.
This is why it is important that you speak with a reputable bankruptcy attorney if you are considering filing for bankruptcy. The Southern California Legal Group offers legal advice for anyone who may be considering filing for bankruptcy, contact us today to set up a free, no-obligation case evaluation.