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Business Owner files for Chapter 7 Bankruptcy but does not list asset on the bankruptcy filing, can anything be done?

Natrona Heights, PA |

A business owner of an LLC contractually owes me about $20,000. This business owner filed for Chapter 7 Bankruptcy after I had taken him to common pleas court civilly to pursue collecting this debt. However, on his bankruptcy filing he did not list an asset which is valued at $300,000 which is in both his personal name, and the business's name.

I thought most assets were not exempt from being listed on bankruptcy filings? Should I inform the trustee of this? This asset is a piece of property owned by this debtor but is not his residence.

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Attorney answers 5

Posted

The information you are not addressing is whether the asset was listed in the bankruptcy petition. If this asset was listed, the trustee will make an determination whether the asset will be administered on behalf of the estate. If the debtor failed to list the asset, then yes you should contact the trustee.

Asker

Posted

Hi Christine, thanks for answering my question. The debtor failed to list this asset. I have a copy of everything from PACER. Also, another thing that seems fishy, is that this debtor purchased as of 4 weeks ago a new vehicle for $30,0000 which is listed on the filing. However, the debtor is stating he only earns $400 per month on the filing. Do bankruptcy trustees catch things that don't appear to make sense? Why would somebody go out, and purchase a new vehicle via an auto loan for $30,000 but then file bankruptcy within 4 weeks?

Asker

Posted

$30,000 new vehicle sorry typo

Christine B. Adams

Christine B. Adams

Posted

That is a concern, but not illegal. If you are a creditor you have the options to go to the 341 meeting and ask these questions. Many creditors to not take advantage of the 341 meeting, but that is where the debtor is under oath, so it is better to ask at the hearing.

Posted

In many instances, a debtor will file a "skeleton petition" containing little information beyond the list of debts and will have a couple of weeks to "fill out the skeleton" by amending the missing information. The proper party to contact if the debtor does not amend the petition to list every asset is the office of the United States Trustee as well as the panel trustee assigned to the Debtor's case. Hope this perspective helps!

Asker

Posted

Hi Dorothy, thanks for asking my question. How long does a debtor typically have to 'amend' missing information?

Asker

Posted

*answering

Dorothy G Bunce

Dorothy G Bunce

Posted

It will really depend on how egregious the omission is - but if it isn't disclosed at the 341 meeting & the trustee has heard about it, the trustee will want to see if the liar will lie under oath in a courtroom setting so that criminal charges may be filed. Trustees often like to wait until the case is ready to close to start seizing property and moving to deny the discharge. Investigations can take a long time

Posted

You have several options, however, you really need to retain a lawyer to determine the proper course. You could report it to the trustee, to the US Trustee, or even file an objection to the debtor receiving a discharge or to the dischargeability of your debt. These are not easy issues to resolve and there are up sides and down sides to each course of action. What I am saying is that you should do nothing without getting advice of bankruptcy counsel, and not just any attorney, but one that is experienced in creditors rights.

Jon Noel Dowat

Jon Noel Dowat

Posted

Agreed! File an objection and get the trustee and court on you side. Once the Bankruptcy Court finds out about the asset then bring your claim in the Bankruptcy Court.

Posted

In order to determine whether he accurately listed his ownership interest in the property, you and your attorney need to look the Schedule A, if it is real property, or schedule B if personal property. If it is real property then you may be able to obtain a copy of the deed showing ownership from the appropriate recording office. If he does have an interest in the property, you would want to provide a copy of the deed to the trustee and the U.S. Trustee's office. Undisclosed property is generally never exempt and can be sold to benefit creditors by the trustee.

Posted

If there is an undisclosed asset, you should report it to the Trustee. There could be assets enough to pay your claim. However, this is a complicated area of the law and you need an attorney to advise and protect your rights.

Barbara Lee Franklin

Barbara Lee Franklin

Posted

One of the complications is that you may be entitled to have your attorney's fees reimbursed by the estate if the assets you "found" is liquidated by the trustee and distributed to creditors. You will also want to explore any possible objections to the discharge of the debt owed to you and a good creditor's attorney can assist you in exploring all the options.

Barbara Lee Franklin

Barbara Lee Franklin

Posted

change "is liquidated" to "are liquidated."

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