When you file for bankruptcy, a key part of the process is creating an inventory of your assets. This is vital because the courts use the value of your assets to determine what they can liquidate to help reduce the write-off balance of your debts. As a result, you're expected to be fully forthcoming about your assets. Here's a look at what you need to know about asset declaration, hiding assets, and bankruptcy law.

Are All Assets Included In Bankruptcy?

In order to really understand the basics of bankruptcy and asset management, you have to understand what types of assets are included in bankruptcy. In most cases, any secured assets that you include in your bankruptcy will be liquidated by the trustee. However, in most cases, certain assets are excluded from the bankruptcy proceedings. For example, you're usually allowed your primary residence and a vehicle as exclusions, allowing you to keep both of these assets.

Aside from those exclusions, you are required to disclose all other assets to the bankruptcy trustee. That means reporting additional property, vehicles, valuables, retirement funds, or bank accounts. All of these things are a key part of your bankruptcy proceedings and are legally required to be disclosed.

Remember, hiding assets in a bankruptcy filing is illegal. Examples of hiding assets include withdrawing cash, giving assets to other family members as gifts, and creating fake records of liens that reduce the value of assets.

What Happens If You Hide Assets in a Bankruptcy?

If you attempt any of the methods of hiding assets and your bankruptcy trustee discovers it, you'll find yourself facing legal implications. Your bankruptcy trustee could take you to court for fraud, stop your bankruptcy proceeding, or even have your bankruptcy discharge recalled if it's already been discharged. A conviction for hiding assets in bankruptcy can leave you facing significant fines and penalties as well as the potential for jail time in severe cases. 

It's important that you understand these facts and make every effort to keep your asset logs as accurate and comprehensive as possible when you're filing for bankruptcy. Work closely with your bankruptcy trustee to make sure that everything is properly accounted for and to answer any questions that you might have along the way. He or she can be sure that the information is correct.

To learn more about declaring bankruptcy or the process, reach out to a bankruptcy lawyer near you.