Top Five Things Not To Do In Bankruptcy
Debtors who file bankruptcy can be understandably nervous about the process. The most effective approach is to tell the truth. Here are five things not to do:
- 5. Transfer $30 million to trusts that you created and control and then file a chapter 7 bankruptcy claiming you can’t pay your $50 Netflix bill. See In Re Lane, Case No. 11-20398 (D. Bankr. Wyo. 2011).
- 4. Tell the IRS that you can’t pay $3.8 million in back taxes because you only have a monthly income of $833, but defend a bankruptcy case by claiming annual expenses of $48,000 for a nanny to watch your teenager, $43,000 for groceries and travel expenses of $75,000. See In re Feshbach, Case No. 8:11-bk-12770-CPM (M.D., Bankr. Fla. 2013) (The outcome of the Feshbach case is pending).
- 3. Dare the trustee to evict you from your million dollar house. In Re Lane (when federal marshals did evict Lane, they discovered an undisclosed Renoir painting under the bed and over $100,000 of previously undisclosed gold coins in his car.)
- 2. File for bankruptcy and then sell your luxury resort in Mexico for $13.8 million without court approval and then refuse to tell a federal judge where the money went. In re Blixseth, (U.S. Dist. MT 2013). (Blixseth remains in jail for contempt.)
- 1. Tell the trustee that your personal possessions are worth only $400 but then, after a fire destroys your house, tell your insurance company they are worth $105,000. In re Litsenborgh, Case No. 04-21382 (D. Bankr. Wyo. 2004). (The couple were convicted of bankruptcy fraud by a federal jury.)
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