Law Offices of David Enos
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HIDING ASSETS FROM THE BANKRUPTCY TRUSTEE IS A BAD IDEA
It’s pretty important to be as truthful as possible when listing your assets in your bankruptcy schedules. The court – and your attorney - does not look kindly on attempts to conceal your assets to avoid having them liquidated.
Consider the story of Robert Marrama. In March of 2003 Marrama filed for Chapter 7 bankruptcy protection and proceeded to list all of his assets for the trustee to consider in discharging his debts. Before he completed the schedule, however, Marrama decided to take his estate in Maine and transfer it to a trust for ‘no consideration’, that is, he gave it to a trust (of which he was the sole beneficiary) for zero dollars. Marrama then claimed that the property’s value was $0 and used that as a justification to say that he had not transferred anything of value in the 12 months preceding his filing.
The bankruptcy court caught on very quickly and denied his Chapter 7 petition on the grounds that he had acted in bad faith. Marrama tried to back-peddle. He said that the discrepancy was due to a “scrivener’s error”, that his words did not properly convey what he was meaning to say, and then decided what he really wanted was a Chapter 13 so he could keep his property in Maine. The court said no.
So he appealed his case up the ladder until the First Circuit Court of Bankruptcy Appellate Panel decided that because Marrama acted in bad faith (or was such a poor ‘scrivener’) that there would be no Chapter 13, but they would indeed reinstate and approve his Chapter 7 petition and sell all of his stuff – including his coveted Maine estate – to cover his debts.
Marrama took it all the way to the Supreme Court, which essentially ruled that once you try to pull one over on the court, you don’t get a re-do. The Court noted that the Marrama was not an "honest but unfortunate debtor[s]'" that the bankruptcy laws were enacted to protect. The bankruptcy laws are designed to protect honest individuals in financial distress, but this ruling shows how little tolerance the courts have for individuals acting in bad-faith.
Robert Marrama, needless to say, doesn’t spend his summers in Maine anymore.
If you are considering filing for bankruptcy, please contact the Law Offices of David Enos for a free consultation with an Amarillo bankruptcy lawyer today (806)372-7307.
Information on this website is based on general principles of law. They may not apply to your situation. Nothing in this article constitutes legal advice and no reliance should be placed on the legal principles set forth in this website. This is why you should personally consult with attorney David Enos about your case.
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