When a person files for bankruptcy, they are seeking court protection from their creditors. Whether the person filing needs time to regroup and negotiate more favorable payment terms or wants to sell assets and get a clean financial slate, abankruptcy filing can solve a myriad of different financial issues.
During bankruptcy proceedings, the person filing is required to provide the court with a complete listing of assets and liabilities so the court can get a complete financial picture. This includes bank accounts, real estate, vehicles and anything in the home with value. Sometimes though, a person will attempt to hide assets from the court so it cannot be included in the asset list that can be sold to pay off creditors. Our New York readers might be interested in a case where a man hid assets and the resulting legal battle made it to the highest court in the land.
A California man filed a Chapter 7 bankruptcy. He claimed a $75,000 homestead exemption for his home. It was later revealed that he had not listed all of his assets when he filed for protection. The bankruptcy court agreed that part of the homestead exemption could be used to pay off certain legal fees used to uncover the fraud. An appeals court agreed with the bankruptcy court.
However, the US Supreme Court reversed the decision. The court stated that exempted funds cannot be used during a bankruptcy proceeding, even if it’s to offset fraud. The bankruptcy court will have to find some other way to recoup those funds.
Bankruptcy when used correctly can help a person seeking financial relief. For anyone who is struggling to keep their financial head above water. seeking advice about possible options from an experienced legal professional can make a bleak financial future look a bit brighter.
Source: StarTribune, “Supreme Court says exempt funds protected in bankruptcy, even in cases of debtor misconduct” No author given, Mar. 04, 2014by