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Why asset disclosure is important while filing bankruptcy

If you are preparing to file bankruptcy in an Iowa court, be sure that you have accurately disclosed your financial assets. In the event your bankruptcy judge discovers that you have omitted one or more of your assets, you could face serious trouble. Not only can your bankruptcy case fall apart, but you might end up charged with bankruptcy fraud.

Asset concealment is a serious problem in bankruptcy fraud. In fact, the Cornell Law School’s Legal Information Institute website says that concealing assets is a part of almost 70 percent of all instances of bankruptcy fraud. Hiding assets from bankruptcy consists of neglecting to list financial assets as well as not listing debts that you currently own. Consequently, a creditor whose debt has been hidden cannot have the debt resolved in bankruptcy.

The U.S. Department of Justice website makes it clear that a filer does not have to proactively hide an asset to count as an act of fraud. Simply not listing an asset on a bankruptcy report is sufficient to constitute an act of concealing assets. Since a bankruptcy filer has an affirmative responsibility to list assets, any omission in doing so would count as concealing assets from a bankruptcy court.

In some cases, though, a person might acquire an asset after the bankruptcy case has been filed. The question of whether such an asset should be disclosed depends on its relationship to the filer’s assets before the bankruptcy petition was filed. If the asset was acquired from proceeds from assets owned before the filing, failure to disclose the asset could be considered a crime.

For bankruptcy fraud to be successfully prosecuted, it must be proved that the person intended to commit fraud, though even if a person was to accidently fail to disclose an asset, it can tie up a bankruptcy case that should be moving forward and still possibly land the filer in legal trouble. Consultation with qualified bankruptcy attorneys can help a bankruptcy filer to not accidently neglect disclosing one or more financial assets.

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