There are certain rules that govern a person's actions prior to filing for bankruptcy and during the bankruptcy process. One of the rules is that you can't give away valuable items before you file for bankruptcy. When you file for bankruptcy, all valuable items have to be declared on the personal property schedule. Giving items away or failing to declare items on the schedule can land you in trouble.
A case is moving through the courts now that involves a man who made a donation of a medallion to the State Department and other items to his mother. Those donations were made just before he filed for Chapter 7 bankruptcy in 2011.
At the time of his filing, he declared $651,874 in assets. Despite his love on antiques, the man only listed a few antiques on his personal property schedule. His assets were declared at more than $1.4 million.
The medallion is one of the sources of trouble for the man. A bankruptcy trustee has sued the State Department to get the medallion back. The State Department claims the medallion is worth $5,000, but the bankruptcy trustee valued it at $50,000 to $100,000. The State Department says it doesn't have to give it back because the donation fell under the Religious Liberty and Charitable Donation Protection Act.
The antiques he gave to his other are also a source of trouble for the man. He re-inherited the items when she passed away in 2013. Because of his bankruptcy paperwork, the IRS declared his debt of $125,000 uncollectable.
The man failed to declare the medallion and other antiques on an IRS form so he was charged with fraud. He has pleaded guilty to that charge.
This man's case shows how important it is to provide accurate information in a bankruptcy petition. Working with someone who understands the required information can help you to ensure compliance.
Source: The Wall Street Journal, "Stories of Weird Bankruptcy: The Trial of the Alabaster Medallion," Stephanie Gleason, Aug. 19, 2015