According to an article in the Star-Telegram, a woman who hid more than $255,000 from a bankruptcy trustee has been sentenced to nearly three years in prison.
The article said:
"Hardy filed a personal injury lawsuit in 2001 against GE Modular Space Transport International Pool Corp. She filed for bankruptcy before the settlement. Authorities say she hid proceeds from the lawsuit. Hardy was also ordered to pay $50,000 in restitution. She was convicted of the charges on April 17."
When a debtor files bankruptcy with a pending lawsuit, that lawsuit must be disclosed to the bankruptcy trustee. If a debtor fails to disclose all required information to the bankruptcy trustee, the debtor's bankruptcy case may be dismissed. Also, if a debtor receives a settlement or judgment in his/her favor from a lawsuit, that money may become part of the bankruptcy case. In the case mentioned above, this debtor received a settlement from the lawsuit after filing bankruptcy; but failed to disclose that fact to the bankruptcy court. It's a shame that this debtor will spend nearly three years in prison for something that could have easily and probably cheaply been resolved.
If she had disclosed her settlement to the bankruptcy trustee, she may have been able to keep a significant portion of her settlement with the help of an experienced bankruptcy attorney. Please do not make the mistake of this woman, be honest with your bankruptcy attorney and bankruptcy trustee. Don't attempt to hide any assets because if the bankruptcy court discovers the hidden asset you may be facing a prison sentence.