Dallas Bankruptcy Attorney: When I prepare bankruptcy documents, I stress to my clients that they need to be accurate. In fact, lying on bankruptcy documents carries a maximum potential penalty of five years in prison and a fine of up to $250,000. The area where bankruptcy fraud is most common is in preparation of the bankruptcy schedules in which property owned by the debtor is disclosed.
When you file bankruptcy you are required to list all of your assets, consisting of both real and personal property, and assign a value to each item. This can sometimes be difficult. How do you assign a value to your old recliner, a used microwave, or your clothes? Bankruptcy trustees understand that it may be difficult to determine what something is worth. You will not be thrown in jail for stating in your schedules that you believe that your couch is worth $300.00 when someone is selling the exact same couch on CraigsList for $500.00. Legal problems arise when debtors fail to disclose the existence of assets or grossly undervalue the asset. Take for example, the legal problems of David Findel of MonMouth County, New Jersey.
On January 29, 2010, Findel filed for individual Chapter 7 bankruptcy protection. In his bankruptcy petition, Findel concealed almost $200,000 in personal assets from the U.S. Trustee, the bankruptcy case trustee, and creditors. Findel claimed in the petition he had $5,500 in cash on hand, no household goods, no jewelry, no automobiles, and no other personal property of any kind not already listed in the petition. However, according to documents and statements of witnesses, Findel actually had approximately $41,851 in cash on hand, eight watches with an estimated value of approximately $55,350, 21 boxes of fine china and silver with an estimated value of $13,965, approximately 511 bottles of wine with an estimated value of $44,540, 11 paintings with an estimated value of $7,750, and four pieces of jewelry with an estimated value of $6,240, at or around the time he filed the petition. Findel claimed that in June 2009 he had transferred a 2009 Jeep Wrangler to another individual in exchange for $5,000, but documents and witnesses indicated he still possessed the vehicle, which had an estimated value of $19,350.
Mr. Findel’s actions constitute bankruptcy fraud, and as a result he is going to jail. But there is a great deal of difference between what Mr. Findel did and a failure to accurately appraise your property when determining value on your schedules. As a general rule, I tell my clients to list all of their property, and assign each item a value equal to what they think the item is worth if they were to sell it today. For most of your property you can use garage sale value. For your home you should use the fair market value of your home based upon the sale of comparable properties in your area. You can use your counties tax appraisal value as a starting point in determining home value. For your vehicles use the NADA price list for used vehicles. Just make sure that you list all of your property and you are reasonable in assigning the property value, and you will avoid Mr. Findel’s fate.
(Source: ahherald.com)
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