Reasons For Bankruptcy Fraud
Criteria For Asset Detection Absent. The agency claims, “detecting and combating bankruptcy fraud is a U.S. Trustee Program priority.” The trustees appointed by the Justice Department to oversee almost every bankruptcy filed in the U.S. are not required by law or regulation to have any expertise in tracing or recovering concealed or stolen assets. Indeed, criteria that individuals seeking appointment as a U.S. Trustee are required to meet contain no mention of the sort of asset tracing and recovery skills that would enable a trustee to detect the signs of fraud.
Professional Qualifications. According to the Code of Federal Regulations, there are relatively few professional qualifications required for appointment to the panel of trustees charged with overseeing filings under Chapter 7 of the bankruptcy law or to appointment as a standing trustee. Attorneys admitted to practice before the highest court of a state or the District of Columbia are eligible, as are Certified Public Accountants.
However, those without such professional qualifications can still be eligible for appointment if they graduated from a four-year college and earned at least 20 credit hours of “business-related courses.”
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Land Trusts Hide Real Estate Ownership
What to hide your real estate ownership? A land trust is interesting in that it allows for you to hold onto property anonymously without your name appearing on title in the county recorders office. If you own a home and that asset is in a land trust it does not tie you to that property publicly. Your name does not appear in the public records as owning that property. So, say someone sues you or your business. It is unlikely that an opposing lawyer will initially be aware of your ownership the properties that you are associated with that are entitled to land trust. They will not be drooling at the sight of what financial benefits they can obtain from your real estate holdings, because your association with them are essentially invisible.
A land trust is generally not an asset protection device. It is a tool that can provide privacy of ownership. So, essentially, it is a means to hide assets, that the trust holds, for your benefit. If you someone sues you, however, and you lose the lawsuit, the opposing attorney will almost certainly find them.
Before an attorney accepts a case on a contingency, he or she will most likely do an asset search to see what you own and what the attorney can take. So, a land trusts may discourage an attorney from taking a case on a contingent fee basis because, by camouflaging the ownership your home and other real estate, they can make you appear poorer than you really are.
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Hiding Money With Cryptocurrency
At this point, youre supposed to have understood the process involved in hiding money away with the use of cryptocurrency.
Hiding cryptocurrency from people, family, partner or spouse is not a crime, but you have to do it with the mind of no guilt.
If you must hide your crypto investment for a very long time, Ill suggest you write a will incase of unforeseen circumstances that may arise in future.
Do not forget to always keep your investments in an offline cryptocurrency wallet, as its the best way to keep your funds away from the internet hacks and thefts.
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The Three Types Of Assets When Filing Bankruptcy
To understand which assets are at stake for liquidation under Chapter 7, its helpful to know the types of assets that can be included in a bankruptcy estate.
There are three types of assets in bankruptcy:
- Personal property. This is whats considered material goods examples include clothing, furniture, artwork and vehicles.
- Real property. Real property includes land and improvements or buildings tied to land, such as a house or barn.
- Intangible property. As their name suggests, intangible assets include property that isnt physically material, but has value. For example, child support, alimony and retirement savings are intangible property.
What Happens If You Are Caught Hiding Assets
- The disclosing of all assets is mandatory therefore, you could be punished for a premeditated criminal act if you attempt to hide your assets.
- The result for hiding assets is also a denial of the discharge of your debts. Joe and Teresa Guidice was denied a discharge of over $13 million, most of which may have qualified for discharge, had they been open and honest throughout the proceeding. They will now remain legally liable for those debts.
- It will be noted on your criminal record and your credit report.
- It is a violation of Federal Law. You could be looking at sentences and fines around 5 years in prison and a $250,000 fine.
- Reimbursement of gifted assets.
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Are You A Beneficiary Of A Will Or Will You Receive An Inheritance
When the bankruptcy papers are signed the debtor also swears an oath that the information provided is true.
It is a serious offense to give false information to your trustee and may result in fraud charges being laid against you.
So, is there anything a person can do to mitigate his bankruptcy if he expects to receive an inheritance?
Here is another example.
Our firm had a person in bankruptcy come into a large inheritance, where the creditors would be paid off in full.
We suggested he file a consumer proposal.
The consumer proposal was accepted by the creditors.
This meant that the creditors would still get paid in full but the debtor would benefit by not having a bankruptcy on his record.
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Common Forms Of Fraud
Nearly 70% of all bankruptcy fraud involves the concealment of assets. can only liquidateassets listed by the debtor thus, if the debtor fails to reveal certain assets, he can fraudulently keep them despite owing an outstanding debt. For further concealment, the debtor might transfer undisclosed assets to friends, relatives, or associates so it cannot be found. Fraudulent concealment makes loans more expensive, because it raises the risk and costs associated with lending and passes those costs on to other hopeful borrowers.
Petition mills are one type of bankruptcyfraud scheme on the rise in the United States. Petition mills pass themselves off as consulting services, purporting to help tenants experiencing financial difficulties avoid eviction. While the tenant believes the service is negotiating on his behalf, the petition mill actually files for bankruptcy in his name and drags out the proceeding and charges him exorbitant fees. The tenant is left with no savings and a in ruins.
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How Are Bank Accounts Protected In A Bankruptcy
If part of your cash or bank account deposits is not covered by an exemption, you may still be able to protect some or all of these funds by some careful pre-bankruptcy planning. Pre-bankruptcy planning, also called asset conversion, is the legal method of reorganizing assets in order to protect as much property as possible from creditors.
Dont Pay Back Family Members Or Friends
Donât use your money to pay back family members or friends. Even though it may feel like the right thing to do at the perfect time, itâs not.
Bankruptcy law doesnât allow you to treat one creditor better than others. If you pay back a creditor within a specific period of time before filing bankruptcy, the payment is considered a âpreferential transfer.â The bankruptcy trustee can âundoâ a preferential transfer by asking you or your relative to give back the money.
You are of course allowed to pay back your family member after filing bankruptcy. But you canât do so beforehand.
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Other Ways To Protect Your Assets
There are some inexpensive, simple ways to protect assets that anyone can implement:
- Transfer assets to your spouse’s name. However, if you divorce, the end results could be different from what you intended.
- Put more money into your employer-sponsored retirement plan because it might have unlimited protection.
- Buy an umbrella insurance policy that protects you from personal injury claims above the standard coverage offered by your home and auto policies.
- Make the most of your state’s laws regarding homesteads, annuities, and life insurance. Paying down your mortgage, for example, could protect cash that is otherwise vulnerable.
- Don’t mix business assets with personal assets. That way, if your company runs into a problem, your personal assets may not be at risk and vice versa.
Meet With A Bankruptcy Lawyer
The last thing you want is a problem in bankruptcy courtand there’s no reason to subject yourself to such a problem. Most bankruptcy lawyers can help you achieve your goals in a manner that keeps you out of trouble. Or, at the very least, a bankruptcy attorney will help you understand why trying to skirt bankruptcy laws won’t be worth the perceived benefit.
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Avoid Owing More Than $3000 To A Single Creditor
It is not cost-effective for creditors, especially large creditors to sue consumers for relatively small amounts of money. It is possible that a person might owe $25,000 in unsecured consumer debt but he doesnt owe more than $3,000 to a single creditor. There is a good chance that this consumer might not be sued by a single creditor because the consumer does not owe more than $3,000 to any one creditor.
Keep Your Assets In Chapter 13
Resist the urge to hide your assets. Talk over your options and your exemption opportunities with your bankruptcy lawyer.
If you have more assets than you can protect with the available exemptions, consider filing Chapter 13.
In Chapter 13, the debtor generally keeps all of their property. Payments to the Chapter 13 plan give creditors what they would have gotten in the case if it were under Chapter 7 instead.
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Offshore Asset Protection Trusts
The offshore asset protection, properly established in the right jurisdiction, is considered by many experts to be the most powerful asset protection tool. Common jurisdictions are the Cook Islands , Nevis and Belize . Its clear what you may be thinking right now. Is this legal to do? Is this safe? Can I really feel secure when I transfer my assets to a trust in the Cook Islands? The answer to all three of these questions is yes.
There have been attempts to crack the trust by the U.S. government on two occasions. Even they tried and failed not that we would intentionally set up asset protection from the U.S. government, mind you. Subsequently, actual case law has demonstrated that this a clearly a legal and safe place for assets. Cook Islands Trusts have proven consistently to satisfy those who have them, and even exceed their expectations. The trustee we use is our own Cook Islands law firm. The following will discuss why we can trust them.
You have access to your assets while theyre in the Cook Islands Trust trust. In addition, you are the settlor of the trust, the one who had the trusted created. You can also be the beneficiary of the trust, the one who enjoys its benefits. Thus, you arent giving away your assets for someone else to use. The trust owns 100% of an offshore LLC. The offshore LLC holds the bank account. You are the manager of the LLC and the signatory on the account.
Why Does The Float Matter
The money in your bank account on the day you file belongs to your bankruptcy estate.
In the eyes of the law, the money in the bank is yours, even though youve written directions to the bank to pay some of it out to the holders of your checks. Those directions just havent arrived at the bank.
A bankruptcy trustee can demand that you pay him that balance for the benefit of your creditors, even though the money has long since been paid out by the bank, who knew nothing of the bankruptcy case when it honored your check.
Include Money You May Have Coming To You
When you list your property on the bankruptcy forms, you must include not only property you have when you file, but also property that you may have coming to you. Here are some examples:
- an inheritance from a recently deceased relative that you have not yet received
- stock options, trust funds, or tax refunds
- pensions, retirement funds, annuities, and life insurance, and
- judgments from lawsuits you’ve filed or could file, arising from a personal injury or other matter.
All of these are examples of property that you must list on your forms. You may get to keep some or all of this property by claiming it as exempt, but you must list it so that the trustee has a complete picture of all of your finances.
What Are Hidden Assets
As part of the bankruptcy process, you have to list all of the debt you have that needs to be discharged but you also need to list everything you have that is considered an asset that can be sold to pay some of your debt.
There are several ways that people may try to hide assets. They may just lie about their existence or they may ask someone to hold them or transfer them to another persons name. Some people may even go as far as creating fake documents to cover their worth.
If it is discovered that you have hidden assets, you dont go back to square one. Theres no starting over. Doing it intentionally has serious consequences.
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Money You Receive During Bankruptcy
This is money that doesn’t form part of your ordinary income. It can include superannuation, inheritance money, gifts of money and compensation payments.
Any prizes or lottery winnings you receive during bankruptcy are an asset that your trustee can claim.
Certain types of payments may be protected meaning the trustee can’t claim them.
If you purchase assets using protected money, your trustee may not be able to claim this. For example, if you use 100% protected money to purchase the house, your trustee is unable to claim this. If you purchase a house using only a portion of protected money , the trustee may seek to claim 80% of the house. The trustee would then refund you the protected portion .
For more information about types of payments the trustee can claim see What happens to my money?
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