As readers of our blog and know, we strongly encourage folks to fully disclose their assets as well as their liabilities to their attorney. Bankruptcy planning means working with the lawyer to decide how to deal with each asset and each liability. Most cases are clear, and can even be easy. It didn’t work that way in Madison, Wisconsin this past week.
Brett Pohle, who filed for Chapter 7 bankruptcy protection, neglected to include assets he owned on his federal bankruptcy petition and schedules. This was his first mistake. Usually, mistakes are inadvertent. Unfortunately, Mr. Pohle’s mistakes were not.
Assets Must be Declared in Bankruptcy
Do you need to declare all assets when filing for bankruptcy or are there exceptions? There are no exceptions. But there are exemptions, and many assets are exempt! Mr. Pohle failed to state that he owned nine guns and a camper on his petition. Then, when asked about it, apparently lied, saying the firearms and camper were sold. Then when asked for some proof, he asked a friend to sign a false bill of sale for the camper. Furthermore, he convinced that friend to testify falsely in front of a grand jury.
Criminal proceedings began, and a conviction resulted, with Mr. Pohle being sentenced to thirty days in federal jail, a $5,000 fine, and to pay the value of the concealed assets to the Trustee.
Why the still penalty? According to reports, the judge in the criminal court found that since he had filed bankruptcy before, and he liked and tampered with a grand jury witness, he was motivated by “greed and selfishness” and the $5,000 fine was in line with the misrepresentation, which was $4,875.
Bankruptcy Planning and Exemptions
An experienced bankruptcy lawyer, with an honest client, could easily have handled this situation. There are many ways. First, we learned that Mr. Pohle was employed. Thus, had he sold his firearms and camper, legally, and put the money into a protected retirement account, he could have listed the assets as “exempt” from the Trustee. He could have used the monies toward paying off his mortgage, with the equity being “exempt” under the homestead portions of the bankruptcy law. Under many circumstances, any of these solutions would have worked. Further, he could have sold the assets and used the money for usual expenses and, once spent, filed his petition.
Or, he could have done any number of things with other assets and likely kept the firearms and camper, so long as he did not go over the federal, or state, exemptions. Working with an experienced bankruptcy lawyer would have resolved these issues.
What Should You Do to Find Exemptions?
Seeking the advice of an experienced bankruptcy lawyer in Massachusetts would lead you to understand what you can keep, and how you can exempt those assets that qualify. The case decided in Wisconsin is an extreme example of what happens when the debtor is not forthright with his attorney. The case could have resolved with discharge of all debts, like most cases do, with a little bit of bankruptcy planning. And honesty.
Call 617-227-7423 for a free bankruptcy consultation with Attorney Neil Burns who has been helping folks with debt problems in Massachusetts since 1985.
