A word of caution to those Florida residents going through bankruptcy who attempt to hide assets through non-disclosure or by resurrecting the tired old chestnut, otherwise known as the “I lost it at the casino” defense. Judges and trustees have heard it all many times before.
One man and his wife suffered some financial setbacks after he lost his job in 2006. Through an arbitration process, he was ultimately reinstated with restored pay and benefits. But not before filing for bankruptcy in another state. The couple listed the arbitration claim on their asset declaration, giving its value at about $280,000 and claiming a personal property exemption of $10,000. When that actually came to fruition, the attorney who represented him warned him that monies received from arbitration, in part, belonged to the bankruptcy estate. The trustee also warned him of same.
The man eventually received $171,534 as an arbitration award. The total was bifurcated into $120,873, earmarked as money earned prior to his Chapter 7 filing and thus, the property of the estate minus the $10,000 personal property exemption. The second portion was the amount of $50,661, considered to be free and clear earnings from after his bankruptcy filing.
The man dragged his feet and avoided making the payment, ultimately claiming to have gambled it away on lottery tickets and at casinos. The Trustee did not find that either plausible or humorous and filed a Turnover Motion to force him to return the entire sum to the bankruptcy estate, minus the property exemption funds.
After exhaustive motions and legal maneuvers wherein the man consistently refused to comply with court orders for the return of the funds, the judge issued a warrant for the man to be arrested and incarcerated. Just this month, the man filed an appeal without counsel. He remains free while his appeal is pending.
It’s never a good idea to try to dupe your attorney, the trustee or the courts in cases of asset exemptions during bankruptcy. Full disclosure and transparency in all of your financial dealings are required to clear your name and start with a fresh slate.
Source: Forbes, “The ‘I Lost It At The Casino’ Defense Fails Again In Tate” Jay Adksson, May. 26, 2014