Articles Posted in Assets and Bankruptcy

Perhaps you have heard the commercials. Some insurance company offers to put your money into an annuity and give you monthly pay-outs at some point in the future. An annuity contract may be entered into in order to save for the future – for expenses like college or retirement.

The definition of annuity, according to investopedia.com, is as follows:

“An annuity is a contractual financial product sold by financial institutions that is designed to accept and grow funds from an individual and then, upon annuitization, pay out a stream of payments to the individual at a later point in time. The period of time when an annuity is being funded and before payouts begin is referred to as the accumulation phase. Once payments commence, the contract is in the annuitization phase.”

Filing for bankruptcy is a serious decision for anyone, but is often necessary in order to preserve your family and obtain a fresh start. As part of the process you must list all your assets and detailed financial information on the papers you file. Your attorney guides you through the bewildering paperwork that must be filed to make sure you get your discharge. However, you must be very honest with your attorney and tell him (or her) everything. If you do not list everything or try to hide something, it could result in a criminal bankruptcy conviction and jail time. This is just what happened to a Real Housewife of New Jersey.

Teresa Giudice, the star of “The Real Housewives of New Jersey” was sentenced on October 2, 2014 to 15 months in prison and fined $8000.00 for bankruptcy fraud. When she filed with her husband, they concealed on the bankruptcy papers filed the fact that they owned businesses, had income from rental property, and concealed Teresa Guidice’s income from the Housewives show. At her sentencing, the U.S. District Judge berated her stating,

“I’m not sure you respect this court. I’m not sure you respect the law. On the one hand you are a savvy businesswoman who writes successful cookbooks and markets herself so well. On the other hand you say you didn’t know how to cooperate. It defies logic. In the eyes of the law, it doesn’t matter who you are.”

In Bankruptcy and in life, a lesson you learned in the sand box, “honesty is always the best policy,” absolutely holds true. Federal Bankruptcy law requires that you include every asset that you own on the day you file your bankruptcy case, as in addition to every debt that you owe to any entity or to any person. You may not pick and choose which assets to list or which debts to include, you must include everything. However, just because you list an item of property on your bankruptcy schedules and statements that are filed on your behalf with the Bankruptcy Court does not mean that you will automatically lose that item of property to the trustee administering your Bankruptcy case. To the contrary, it is very possible that your state has a law on the books that would shield that particular item of property from being lost to your bankruptcy trustee, thereby making it “exempt.”

Some people attempt to come up with wild schemes that would make an unexempt item of property exempt or make that unexempt item of property “disappear” altogether. If you are tempted, please understand that it is NEVER a good idea to attempt to “game” the system and “sell” items of property to friends or family members just so those items are not technically titled to you or technically owned by you on the day you file your bankruptcy case (presumably to attempt to shield these items from your Chapter 7 or 13 Trustee who will sell those items of property for the benefit of your bankruptcy estate and your unsecured creditors). This type of game playing can end very seriously, as it did recently for an Iowa couple who will now spend some time in prison for bankruptcy fraud.

According to the attorneys who prosecuted Gerald and Fay Schuerer, this couple attempted to defraud their creditors out of approximately $380,000.00 of assets that the couple “sold” to friends and relatives with the understanding that the items would be reacquired by the couple after the bankruptcy case was filed. This type of dishonesty absolutely does not pay. Both Mr. and Mrs. Schuerer will spend time in jail, pay substantial fines and assessments to each defendant that was harmed (their creditors), and pay $394,984.00 in restitution to the United States Trustee. As a result of their dishonesty, the Schuerers are much worse off than they were before they filed for bankruptcy. No possession or item of personal property is worth the true price you will pay should you engage in this type of “gaming” activity.