When a bankruptcy case is filed, the debtor requests federal protection from creditors. The federal law is not intended to help a debtor escape a debt that he is able to repay. The bankruptcy process depends on the honesty and full disclosure of the debtor’s assets, income and expenses, and even debts. Only the “honest, but unfortunate debtor” receives the full benefit of the bankruptcy laws and a fresh financial start.
Still, some debtors do not play fair. Recently millionaire Shreveport, Louisiana businessman Harold L. Rosbottom Jr., 55, and his girlfriend Ashley Kisla, 44, were convicted by a federal jury for concealing nearly $2 million from Rosbottom’s creditors during his bankruptcy, according to a news release from the U.S. Attorney’s office in Shreveport. Rosbottom purchased 17 cashier’s checks totaling $1,820,195 all payable to Rosbottom, then failed to report the checks during the bankruptcy. He also secretly gave a $140,000 deposit towards the purchase of a 65-foot sport fisherman boat. The FBI discovered Rosbottom’s fraud, as well as a money laundering scheme for the transfer of more than $1.1 million in order to purchase the boat and also for causing the transfer of $540,000 to pay for a 50% ownership interest in a Westwind 1124 jet aircraft.
Federal and state legal exemptions protect property from both the bankruptcy trustee and creditors. The debtor is allowed to keep reasonable and necessary property, retirement assets, and even cash money during a Chapter 7 fresh start. In a Chapter 13 reorganization bankruptcy, the debtor does not lose any property, but must repay his creditors whatever he can afford. The bankruptcy process is fair and equal to debtors and creditors, and the courts will not allow one side to tip this balanced scale unjustly.
If you are considering bankruptcy, speak with an experienced attorney before transferring any property. Your bankruptcy attorney can help you plan for your bankruptcy and advise you the proper way to protect your assets. Concealing assets is simply not worth the risk of fines, loss of bankruptcy protection, or even jail.