The federal bankruptcy system largely relies on the honesty of the debtor. The bankruptcy trustee assigned to an individual's case rarely investigates assets, visits homes, or appraises property. You and your attorney sign statements, under oath, that disclose your assets and property, which is generally taken as truthful.
Lying during the bankruptcy process can carry a very high price. Just ask Thad Corey Theall who was recently convicted by a federal jury in Lafayette, La., of perjury charges relating to the concealment of bankruptcy assets. Mr. Theall, 52, was sentenced to 27 months in federal prison for failing to disclose an asset of $50,000 from the sale of real estate. To make matters worse, Mr. Theall also failed to tell the trustee about this sale during his meeting with the bankruptcy trustee.
In addition to his federal criminal conviction, Mr. Theall was ordered to pay $50,000 back to the bankruptcy estate, was prohibited from filing bankruptcy for three years, was denied a bankruptcy discharge, and was barred him for life from attempting to discharge those debts in another bankruptcy. His wife, a joint debtor in the bankruptcy case, is scheduled to be sentenced in May, 2012.
The case was investigated by the Federal Bureau of Investigation, and prosecuted by the U.S. Attorney's Office. U. S. Attorney Stephanie Finley stated: “In these difficult economic times, many Americans turn to bankruptcy as a last ditch effort to keep their heads above water. This defendant attempted to manipulate the system so that he could continue to indulge the lifestyle he had become accustomed to, even if that meant hiding assets and lying to the court. The system just can’t work that way because the community will lose faith in the system. Bankruptcy is a serious matter, and those who take it lightly or use it in a way to cheat their creditors should know that my office will continue to prosecute anyone who conceals assets from the court.”
Bankruptcy offers many legal protections for honest debtors. If you need to keep property, discuss your situation fully and honestly with your bankruptcy attorney. Your attorney will provide you with options for keeping your property without landing you in trouble with the law.