Legal Question in Bankruptcy in United States

Federal prison for a few years.

Your debts could be ruled non-dischargeable. Your bankruptcy discharge could be denied, or if you already obtained one it could be revoked. You could be criminally charged, fined, and/or sent to federal prison.

Up to 5 years prison, hundreds of thousands in fines, denial or revocation of a discharge, and loss of assets.

Most types of bankruptcy crimes are contained in two federal statutes, one entitled "Concealment of assets; false oaths and claims; bribery," and the other �Bankruptcy fraud.� See for example 18 U.S.C. ��151-158.

Together these include a long list of criminal behavior, but the following four are the most common:

(1) intentionally concealing assets from a trustee or other officer of the bankruptcy court,

(2) making a false oath related to a bankruptcy case,

(3) making a false declaration or statement under penalty of perjury in a bankruptcy case, and

(4) devising a scheme to defraud by:

(a) filing a fraudulent bankruptcy petition,

(b) filing any other document in a bankruptcy proceeding, or

(c) making a false or fraudulent representation, claim, or promise related to a real or false

bankruptcy proceeding, at any time before or after the filing of the petition.

In addition to the crimes listed above committed by those filing bankruptcy, a number of other bankruptcy crimes refer to the criminal behavior of other people. For example:

(1) a creditor filing a false proof of claim in a bankruptcy case,

(2) a person wrongfully receiving property from a debtor after a bankruptcy case�s filing,

(3) someone receiving a bribe related to a bankruptcy case,

(4) transfers, destruction, withholding or concealment of debtor�s assets and/or records by debtors� agents, or anyone else related and unrelated to the debtor, before or after the filing of a bankruptcy case.

The punishment for the above bankruptcy crimes is up to five years in prison AND a maximum fine of $250,000 for individuals and $500,000 for corporations. But the actual sentences are based on factors listed in sentencing guidelines, such as the amount of losses suffered by any victims, whether any court orders were obstructed, whether the person abused a position of trust, and whether he or she cooperated with or hampered the investigation. Also note that bankruptcy crimes tend to be committed in combination with other kinds of criminal activity, so the combined punishment can be much more.

Although going to prison related to a bankruptcy case is very rare, it does happen. On the other hand, you do not need to be concerned if you are being honest: most honest mistakes can be overcome by a reasonable explanation and an amendment of the bankruptcy documents. The U.S. Trustee and the rest of the bankruptcy system is looking for instances where a person is trying to abuse the bankruptcy system by intentionally hiding assets, misstating their value, misleading creditors, or transferring property before bankruptcy. Always be truthful in a bankruptcy proceeding. And especially with your attorney, who cannot help you if you are hiding the truth.

All of the above answers are correct. If you want to report a Bankruptcy crime, you should contact the office of the US Trustee. If you have commited this offense and want to minimize the consequences, I would recommend acting as soon as possible before you get caught. Be sure to discuss your options with your attorney first.

I will answer the question as asked. The question was NOT "what is the penalty for hiding major assets in the schedules or in disclosure" I read the question as " What is the bankruptcy penalty for hiding major assets from creditors prior to filing"? As can be seen from the earlier answers the penalty can be severe if the debtor tries to hide assets in filling out his/her schedules. The officers of a corporation can suffer serious penalties for fraud or non disclosure in the bankruptcy process. However, prior to bankruptcy, there is no rule that says you cannot move assets around to escape attachment or seizure. You cannot file a false document or not give truthful answers in litigation or in debtor exams because non bankruptcy courts also have penalties for fraud. After filing, there is no need to hide major assets because the automatic stay prevents seizure without court approval. Thus, if a debtor has a car that is subject to repossession, there is no rule that says he/she cannot park it in some other person's garage for a short period of time until bankruptcy is filed. After that it is safe pending resolution in bankruptcy court. Of course any strategy must be planned with competent bankruptcy counsel.