Everybody has heard of somebody that's filed bankruptcy and gotten away with hiding a few assets. A lot of people think that it's no big deal to hide a diamond ring here, or some gold coins there - but if the trustee finds out (and the trustee will find out) - the consequences can be severe. Learn why you should never hide assets in bankruptcy.

List Everything - Even If You Know You Will Be Allowed To Keep It.

When you file bankruptcy, you will be asked to list all of your property. Include anything that you have of value - everything from the Star Wars collectables you have sitting in the garage to the furniture in your living room.

Much of that property will eventually be declared "exempt," and you won't be required to sell it or turn it over to the bankruptcy court in order to pay off your debts. However, even if you know that a possession will eventually be considered exempt, you should list it as part of your property for the trustee's consideration.

If you fail to list all of those things, the trustee can:

• revoke your discharge, up to a full year after your case is closed. You will once again owe all of those debts (and they cannot be discharged in a later bankruptcy, either).
• deny your discharge. Essentially, the trustee can refuse to grant you bankruptcy protection from any of your debts (and, again, those debts won't be able to be discharged later).
• allow your bankruptcy to proceed, but seize your assets for sale to pay your creditors and then refuse to discharge any remaining debt.
• seize assets that would have actually been exempt under bankruptcy rules, had they been properly disclosed, and sell them to pay your creditors.
• prosecute you for perjury and hiding the assets. You can go to prison for up to five years, for each "count" of your offense. That means that you could be sentenced to five years for every single asset you try to hide. You can also be sentenced to probation and heavy fines.

How Is The Trustee Going To Know?

Trustees at places like Greg Dunn Bankruptcy know how to look for signs of hidden assets when they review your bankruptcy petition. For example, if your debts include some credit cards with a few high-end jewelers, the trustee is probably wondering where the jewelry went. While it's very possible that you sold the jewelry off a year or two ago at a pawn shop, you may be asked to prove that the items are no longer in your possession.

Sometimes debtors are exposed by relatives, including ex-spouses. If your ex-husband or ex-wife knows that you've been investing in gold or silver coin for the last few years, he or she might not feel badly about letting the trustee know where you are hiding your treasure.

Trustees don't routinely search people's homes, but they do have that power. In some circumstances, they can also search your place of employment, or the homes of relatives (if there's credible information that someone is hiding something for you).

Trustees also have access to public records databases and other internet-based searches. They will examine tax returns, loan applications, and other documents for signs of assets. Did you take out insurance to cover your Batman memorabilia in case of a fire? If so, the trustee is bound to uncover it, and want to know what has happened to the collectables (unless they're already listed on your disclosure forms).

Bankruptcy is about getting a clean start - and that may require sacrificing some things in order to move forward with your life. However, you don't really know what property is and is not exempt until after you've discussed things with your attorney and the trustee. Be honest, and don't attempt to hide or devalue what you have - it can end up costing you far more in the end when you're caught.