Monthly Archives: April 2012

Do I Need to Disclose Property Owned in a Foreign Country in my Bankruptcy Case?

By Ryan C. Wood

When you file for bankruptcy protection in the United States you must to list all your real and personal property.   These assets include both foreign and domestic owned property like houses, bank accounts and investment accounts.

Many people may exclude their foreign owned assets under the mistaken assumption that the bankruptcy trustee may not know or be able to trace the foreign owned assets to them, thereby making those foreign owned assets safe.  The bankruptcy trustee may have multiple ways of learning about these foreign owned assets.   Some of these methods include looking at your tax returns, bank records, official documents, or someone you know may notify the bankruptcy trustee about your assets.

The failure to disclose foreign owned assets may be due to a misconception that since you are filing for bankruptcy in the United States you only need to disclose the assets that you own in the United States.  This is completely false.  You need to disclose ALL assets owned whether these assets are located in the United States or another country.

If you purposefully exclude these foreign owned assets in your bankruptcy petition you will be committing perjury that may subject you to criminal prosecution.  You could potentially be fined up to $250,000 and/or five years in prison.  The bankruptcy judge may also dismiss your bankruptcy case.  The trustee may liquidate your excluded asset in a Chapter 7 bankruptcy case.  None of these outcomes are good for you or your financial situation.  Obviously these results are counter-productive of what you had originally intended, a fresh start free of financial burdens.  An honest debtor receives the fresh start that he or she needs, but a dishonest debtor may end up in a worse situation than what he or she intended.  The moral of the story – be the honest debtor so you receive the outcome that you want.

Just because you have assets in a foreign country does not mean that you would need to give up those assets when you file for bankruptcy.  You still receive exemptions that protect the assets you have.  Whether or not all of these assets are exempted depends on your particular circumstances.  It is best to discuss your situation with an experienced bankruptcy attorney to ensure that all or most of your assets are protected.  Even if not all your assets are protected, the attorney may go over what your options are. You may contact our experienced Fremont bankruptcy attorneys or Oakland bankruptcy attorney today at 877-9NEW-LIFE or 877-963-9543 for a free consultation.

Who is Defined as an “Insider” in My Bankruptcy Case and Why Do I Care?

By Ryan C. Wood

The question of whether a creditor is a considered an “insider” in a bankruptcy case is an important distinction. When you repay one creditor and not others, it is considered a “preference” because you are providing special treatment to a single creditor.  All creditors of the same priority need to be treated equally under bankruptcy law.  Therefore, when you pay one person or one entity and not others, the bankruptcy trustee has the right to avoid that transaction and bring the money back into your bankruptcy estate so that all your creditors will be paid a percentage. If a creditor is an “insider” and you paid them all or a portion of the debt within one year prior to filing for bankruptcy, the bankruptcy trustee may avoid the transaction as a preference under 11 U.S.C. §547(b).  The preference period for a normal creditor (like credit card companies) is 90 days versus one year for an insider, because insiders are more closely scrutinized.

If you have repaid a creditor a significant amount of money before your bankruptcy case is filed it is important to find out if they are considered insiders and talk to your bankruptcy lawyer about the payment in detail.  11 U.S.C. §101(30) defines an “insider” to include a relative of the debtor or a general partner of the debtor.  11 U.S.C. §101(45) defines “relative” to mean an individual related by affinity or consanguinity within the third degree as determined by the common law, or individual in a step or adoptive relationship within such third degree.  This means that if you borrowed money from your sister, she is considered to be one of your creditors.  If you repaid your sister $10,000 six months before you file for bankruptcy, the trustee could avoid that transfer and sue your sister to bring the $10,000 back into the bankruptcy estate.

What if the relationship is a little unclear?  What if you borrowed money from your “Aunt” Margaret who is a close family friend (but not relative) and has known you your entire life and would do anything to help you in your current situation?  In addition to looking at the family ties, courts have also looked at whether there is a close enough relationship between you and the creditor (“Aunt” Margaret in this scenario) that your conduct should be scrutinized at more than regular arms length transactions.  The courts look at whether the creditor would have any influence over you or exert any control over the situation.  If the creditor does have control over you it is not considered to be an arms length transaction and the creditor would be defined as an “insider.”  Some other factors that may be looked at to determine whether the creditor is an “insider” includes whether there was a written contract, whether any interest is being included in the debt and whether the creditor has any advantages based on the relationship.  All these factors point to whether the transaction was made at arm’s length.  If the transaction was made at arm’s length then the creditor is subjected to the regular 90 day preference period.  If it was not at arm’s length then the creditor is treated as an insider who is subjected to the one year preference period.

If you have any questions regarding potential preferential payments, contact an experienced Fremont bankruptcy attorney or Oakland bankruptcy attorney today at 877-9NEW-LIFE or 877-963-9543.  You may also go to www.Fremont-Bankruptcy-Attorney.com for more information.

Foreclosure Scams in Bankruptcy – How Does it Affect You?

By Ryan C. Wood

There always seems to be an increase in crime when the economy is not doing well.  Whether it is increase of violent crimes like muggings and burglaries or white-collar crimes like embezzlement and ponzi schemes it all hurts us  – it makes life  more difficult for more people.  This is evidenced in the recent economic downturn.  An old scam is resurfacing that may delay the foreclosures on homeowners’ properties.  There has been an increase in distressed homeowners transferring a small interest in their home to a person that has recently filed for bankruptcy.  Another variation of the crime is when the homeowner downloads a deed from the recorder’s office and photo shops fraudulent information on the deed.  The county recorder’s stamp is left on the deed.  Most of the time the lender or foreclosure trustee does not verify the information and only sees the deed with the fraudulent information.

The person filing for bankruptcy usually does not know about the transfer of interest in the home.  They probably do not even know the distressed homeowner.  The distressed homeowner probably found the information of the bankruptcy through looking at recent bankruptcy filings.  The homeowners would then send the notice of bankruptcy to the creditors about to foreclose on their home.  Once the lender or foreclosure trustee receives notice that there is a bankruptcy filed from a person that has an interest in the home the foreclosure process is momentarily stopped.  This was the intention of the distressed homeowner all along – stopping the foreclosure and not having to file for bankruptcy.

The worst part is that most of the time the distressed homeowners probably had no idea that they were doing something fraudulent.  They hire companies that guarantee that you will be able to stay in your home for a certain amount of time and the distressed homeowners pay them thousands of dollars upfront to delay the inevitable.  Before these fraudulent companies can get shut down or prosecuted they change name and move elsewhere to provide the same services to other desperate homeowners.  It is a vicious cycle where there are no winners except these fraudulent companies.

How does this affect you, the person that filed for bankruptcy and had no knowledge that someone had transferred a property interest to you?  It may look like you have committed fraud by not disclosing the home in the first place and it costs you time and money to fix something you had no idea would occur.  If a Motion for Relief from Stay is filed in your case by the lender or foreclosure trustee, courts have recommended that bankruptcy attorneys should file a response to the motion with evidence that you had no interest or knowledge in the property and the bankruptcy filer was not involved in a scheme to hinder, delay or defraud the lender.  The bankruptcy trustee and the U.S. Trustee should be notified so they can investigate the issue and prosecute the offenders.

If this occurs in your bankruptcy case and you are not represented by a bankruptcy attorney you should contact the bankruptcy trustee and U.S. Trustee regarding these matters.  If you have any questions you may also us at 877-9NEW-LIFE or 877-963-9543.