When a debtor files for bankruptcy in North Carolina, he or she is required under the law to report all assets. In a Chapter 7 bankruptcy, assets are liquidated and used to pay off outstanding debts. However, despite its illegality, some people may try to conceal certain assets in an effort to keep them.
In fact, according to the Legal Information Institute, 70 percent of bankruptcy fraud cases involve a debtor attempting to hide assets. Sometimes people transfer some of their assets to friends or family members. Other types of fraud can be in the form of bribery, submitting multiple bankruptcy filings at the same time or the filing of false forms. Bankruptcy fraud is a federal crime and the penalties associated with it are serious.
The star of a popular reality show recently found this out the hard way, reports Business Insider. She was found guilty of hiding $755,500 in assets after filing for bankruptcy. She also attempted to sneak in $120,000 in cash into the country from Australia. She must now pay hundreds of dollars in penalties. She was also sentenced to one year and one day in federal prison, followed by two years of additional supervision. She was facing more than 20 separate counts.
Interestingly, the investigation into the hidden assets began when the judge working on the star’s bankruptcy case happened to see her show on television. This led him to wonder why income from the show was not being reported in her bankruptcy filing. It is unclear whether production on the reality show in question will continue.