People who file bankruptcy petitions are, almost always, honest persons who need a fresh financial start. But anyone filing a bankruptcy petition should be aware that there are criminal penalties for bankruptcy fraud.
Lenny Dykstra’s Conviction for Bankruptcy Fraud
Baseball fans remember Lenny Dykstra as a baseball player, who played for the New York Mets, and Philadelphia Phillies in the 1980s and 1990s. After retiring in 1996, he became involved in several business ventures. After suffering several setbacks in these businesses, he filed a Chapter 11 Bankruptcy Petition (a form of business reorganization), which was later converted to a Chapter 7 case. Chapter 7, the most common form of bankruptcy, involves a request to be discharged from your debts. Debtors are allowed to keep a certain amount of exempt property; assets
that are not exempt must be disclosed, and turned over to the bankruptcy trustee. Rather than do this, prosecutors accused him of hiding numerous assets, including valuable baseball memorabilia. He got caught after selling some of these assets, following the bankruptcy. He was sentenced to 6 1/2 months in prison, with some additional time as a result of charges in state court, including auto theft, filing false financial statements, and drug possession.
How Can An Honest Debtor Protect Himself?
The best advice is to disclose everything. Don’t keep secrets, from your bankruptcy attorney, or the bankruptcy court. Disclose everything you own, anything you have sold or given away, along with all of your debts, and your income. If you aren’t sure whether something needs to be listed, talk to your bankruptcy lawyer about it.