Overwhelming debt causes a great deal of stress. You may lose sleep, become angry, or get scared. Fortunately, the federal bankruptcy laws can restructure your debts, provide a fresh start and alleviate your stress.
However, it is critical that you play by the rules.
A man in Tama County, Iowa, recently discovered the importance of honesty and fair dealing during the bankruptcy process. According to the Waterloo Cedar Falls Courier, Jay Freese was convicted of bankruptcy fraud and sentenced to 18 months in federal prison. He was also ordered to pay a $5,000 fine, a $100 civil penalty, and will be on supervised release for three years following prison.
According to court records, Freese ran into debt problems with his hog operation. He obtained an operating loan from Lincoln Savings Bank and put up equipment including a Bobcat, Kubota tractor and ATVs as collateral. He later traded the ATVs for a corn-burning stove valued at $10,700, then filed for Chapter 7 bankruptcy protection. Freese did not list the ATVs or the stove in his bankruptcy filing, even though he still owed Lincoln Savings $354,000.
The bank cried foul after it discovered that Freese had not listed the collateral securing its loan. When questioned, Freese said that he sold the Bobcat and the tractor. Investigators subsequently discovered that there was no sale. They also discovered that he had given his sister $5,700 in cash and she wrote a check in that amount so it would look like payment for the equipment.
A search of Freese’s property by FBI agents found the equipment, along with five firearms, a boat, a snowmobile, a collection of farm toys and $22,102 in cash, none of which was disclosed in the bankruptcy. After being discovered, he pled guilty to bankruptcy fraud charges. Additionally, the bankruptcy court denied discharge of all of Freese’s debts.
Bankruptcy is powerful medicine, but it is only available for debtors who are honest about their income, expenses, assets, and debts. Dishonesty during bankruptcy can mean loss of bankruptcy protection as well as criminal charges.