One thing you have to consider when filing for bankruptcy is that you have to be prepared to give an honest account of all your assets. If you are caught hiding assets in an attempt to avoid liquidating them or altering the amount of money you have to pay your creditors, you could be exposing yourself to serious legal consequences, from lawsuits to charges of bankruptcy fraud.
One major college football coach is finding this out, as he faces a lawsuit accusing him of lying to his creditors. The man, who filed for Chapter 7 bankruptcy claiming tens of millions of dollars in debts, is probably no stranger to Tennessee college football fans.
A real estate acquisition company that the coach was a part of and guaranteed loans for is now suing the man to prevent his $4.5 million debt to the company from being discharged.
In the lawsuit, the company accused the coach of transferring several properties and cash that was in his name to accounts belonging to family members or to a trust, so that those assets would not be listed in his name when he filed for bankruptcy. The company wants to be granted at least $1 million that can't be discharged.
The lawsuit also claims that he negotiated his most recent coaching contract so that he would only be paid after he filed for bankruptcy. The university has denied being complicit in the matter, but the majority of the $850,000 contract is shielded from creditors.
There are strategies to employ when considering filing for bankruptcy to protect assets such as homes and cars, but one cannot lie about what they own when filing. It could mean legal trouble that is far worse than just filing for bankruptcy.
Source: Arkansas Business, "Creditor Alleges John L. Smith Tried to Conceal Assets in Bankruptcy," Mark Friedman, Feb. 12, 2013