In part 1 we learned about one of our old bankruptcy clients. He didn’t put too much effort into telling us about his financial situation. We learned that if you forget to disclose income or assets, you could be in serious trouble. We left off with him right in the middle of his trustee meeting. He’s about to say something that just might get him in trouble.
Slip of the Tongue
When the trustee asked him directly about stocks and bonds that he might own, he admitted that he owned some stock. This had apparently slipped his mind in spite of the three different times we reviewed his information with him in face-to-face meetings. Since he was an honest man (and legally had to be honest sine he was under oath), he admitted that he owned about $500 worth of stock in a company he used to work for.
Stock is not an asset that you can protect when you file for bankruptcy. Had he disclosed this stock to us before we filed his case, we would have advised him to sell the stock prior to filing. He could have used that money for qualified expenses such as his mortgage, utilities, or even food.
Easy Come, Easy Go
However, since he owned the stock when his case was filed, it meant that the bankruptcy trustee would be allowed to sell the stock and give the money to his creditors (minus the trustee’s cut of course).
Our client was very lucky. The trustee didn’t feel like the stock was worth enough for him to bother going through the trouble of selling it. He was one of our rare clients who actually got to keep an unprotected asset.
But think about it for yourself if you are filing for bankruptcy. Do you want to risk losing a $500 asset? What about a $5,000 asset? How about fines and time in jail if the court decides you lied on purpose? Do yourself a favor – rack your brain!