Hiding Assets in Bankruptcy

What Happens If a Debtor Hides Assets While Going Bankrupt?

Filing for bankruptcy isn’t an easy decision. Often, the fear of losing hard-earned assets may tempt individuals to hide assets during bankruptcy. Nonetheless, hiding assets in bankruptcy is not a good idea and can lead to severe consequences.

What Does Hiding Assets in Bankruptcy Mean?

When individuals file for bankruptcy, they’re required to declare all their assets. Some people, however, choose to withhold information about certain assets in an attempt to save them from being used to pay off debts. This act of withholding is what is referred to as hiding assets in bankruptcy.

The Legality of Hiding Assets in Bankruptcy

It’s crucial to understand that hiding assets in bankruptcy is illegal. The Bankruptcy and Insolvency Act views this act as a violation of the law. The act of bankruptcy filing is supposed to be transparent. By being honest about your income, debts, and expenses, your debts can be cleared.

The Consequences of Hiding Assets in Bankruptcy

The ramifications of being dishonest about your assets during bankruptcy can be severe. Here are some potential outcomes:

 

Ineligibility for Discharge from Debts – If you hide assets in bankruptcy, you’ll not be discharged from bankruptcy or your debts. In simple terms, your debt will remain.

Revocation of Discharge – The Licensed Insolvency Trustee can request the court to revoke your discharge if they discover you’ve been dishonest about your assets.

Inability to Discharge Debts in Future Bankruptcies – Any debts linked to a bankruptcy where you’ve been denied discharge for hiding assets will not be discharged in any future bankruptcy.

Potential Criminal Charges – If you’re found to be dishonest, you could face penalties for bankruptcy fraud, which could be up to $250,000, and you could even face imprisonment for up to twenty years.

 

Common Ways People Hide Assets in Bankruptcy

There are several methods individuals employ to hide assets in bankruptcy. These include:

 

  • Being dishonest about the assets they own.
  • Transferring assets to someone else.
  • Creating fake liens or mortgages to make assets appear valueless.
  • Not disclosing an asset transfer that occurred before filing bankruptcy.

 

How Licensed Insolvency Trustees Discover Hidden Assets

Licensed Insolvency Trustees are skilled at spotting signs of hidden assets in bankruptcy. They achieve this by:

 

  • Reviewing your debts.
  • Checking statements from creditors.
  • Conducting public record searches.
  • Carrying out online asset searches.
  • Examining paychecks, bank records, and tax returns.
  • Getting reports from ex-spouses, friends, coworkers, etc.

 

What Happens If You’re Found Hiding Assets?

If your Licensed Insolvency Trustee discovers that you have hidden assets in bankruptcy, they will report it to the Office of the Superintendent of Bankruptcy. The file will then be sent to a special investigation unit, which collaborates with the Royal Canadian Mounted Police (RCMP). If the court determines that you were hiding assets with the intent to defraud creditors, they will press criminal charges.

What If You Accidentally Forget to List an Asset?

If you unintentionally fail to list an asset, you may lose it once it’s discovered. In such cases, it’s advisable to disclose the asset as soon as you realize the mistake. The court is unlikely to deny your discharge if it’s clear that your intention wasn’t to defraud creditors.

Not Sure About Hiding Assets in Bankruptcy? Seek Professional Help

If you’re unsure about the bankruptcy process or worried about losing your assets, it’s best to consult with professionals like Bankruptcy Canada, who can guide you through the process and help you avoid any potential pitfalls. They can also help you evaluate your financial situation and determine the most suitable form of debt relief for you.

Conclusion

Filing for bankruptcy is a difficult decision that comes with its own challenges. Hiding assets in bankruptcy might seem like a viable option to protect your assets, but it can lead to far more severe consequences. It’s always best to be transparent about your financial situation and seek professional advice to navigate through the process.

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