As part of offering Indiana bankruptcy information, I like ”telling tales”. These are not made-up stories, mind you, but news items. For this week’s Bankruptcy in Indiana articles, I’ll be discussing three recent news stories, in order to bust some long-standing bankruptcy myths and review some concepts of how the new bankruptcy laws of Indiana work.
Bankruptcy cases in Indiana, or anywhere else for that matter, involve debtors and creditors. At the Creditors’ Meeting, when the financial situation of the debtor is reviewed in detail, any creditor can challenge the information if they feel it is incorrect or incomplete. (As a longtime Indiana bankruptcy attorney, I’ve taken part in tens of thousands of such meetings.)
Well, one creditor of former Arizona football coach John L. Smith is suing, claiming that Smith has not provided full and honest information in the process of filing individual bankruptcy last September.
Smith is being accused of defrauding his creditors by concealing assets during his bankruptcy Chapter 7 filing by:
- Concealing or destroying records and documents
- Transferring property and cash to family members
- Reworking his coaching contract to defer salary payments until after the bankruptcy proceedings are over
(Remember that the five Zuckerberg bankruptcy law offices operate only in central and southern Indiana, which means I have no information at all about the John L. Smith facts other than what has been served up by news media.) I’m relaying the story to clients and to Bankruptcy in Indiana readers to emphasize the following point:
The bankruptcy system works to provide a much-needed safety net for honest debtors. A key function any lawyer for bankruptcy serves is making sure clients’ financial disclosures are complete and correct.
When people file personal bankruptcy in Indiana (we also handle many Indiana small business bankruptcies), they can’t be allowed to exploit the court system by lying about their assets or about their income, because that would be unfair to their creditors, who also rely on the system to protect their interests.
For that reason, the bankruptcy court is going to be examining any transfers of property completed in the months leading up to the filing. Debtors will be asked if they are expecting to receive any settlements, prizes, bonuses, or deferred income. In deciding whether to approve the bankruptcy petition, the court will take all of that information into account.
If ever there was a situation where lying doesn’t pay – it’s in a U.S. bankruptcy court!
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg