We believe that everyone deserves a fresh start. There are legal solutions available that can help you achieve that fresh start. Through this monthly newsletter, it is our goal to offer you information, as well as solutions, garnered over 38 years of combined legal experience practicing bankruptcy law and student loan law. If you need assistance with your student loans, our goal is to demystify student loans and put you in control of your options. If you are considering bankruptcy, we understand the seriousness of choosing to file bankruptcy, and we want to give you power through knowledge to help you make that decision. Please contact us for a no-cost consultation.

Sincerely,

Jonathan Leiderman and Zach Shelomith
www.lslawfirm.net
lslaw@lslawfirm.net
954-920-5355

Reality Bites When Committing Bankruptcy Fraud

We are often asked by prospective clients if they need to list all of their assets and all of their debts when they file bankruptcy. We always explain that they do, as the Bankruptcy Code requires them to be completely honest about their financial situation. In this day and age of technology, trustees and creditors have ways of finding assets.

As became apparent earlier this month, the consequences of intentionally concealing assets in a bankruptcy filing, and testifying falsely in a bankruptcy proceeding, can be severe.

Two of the stars of "The Real Housewives of New Jersey" - Giuseppe "Joe" Giudice and Teresa Giudice were just sentenced to 41 months and 15 months in federal prison on various bankruptcy fraud charges. In addition, Giuseppe was fined $10,000.00, Teresa was fined $8,000.00, and they have to forfeit $414,588.00.

What is Expected of a Debtor When They File Bankruptcy?

A voluntary bankruptcy case is begun by the filing of a bankruptcy petition, schedules, and a statement of financial affairs, on which a debtor is required to fully disclose his/her financial circumstances, including, among other things, all assets, all liabilities, all income from the most recent 3 years, certain transfers made in the last 2 years, and any anticipated increase in income. Assets include real property and personal property (both tangible and intangible), whether or not the asset is held in the debtor's name or held in the name of another person or entity on the debtor's behalf. The bankruptcy petition, schedules, and statement of financial affairs are signed under penalty of perjury.

Each debtor who files bankruptcy is required to attend a Meeting of Creditors, at which he/she is placed under oath and questioned about the bankruptcy petition, schedules, and statement of financial affairs. If necessary, other types of proceedings may be held in connection with the bankruptcy, such as a Rule 2004 Examination (a bankruptcy deposition), at which the debtor is again questioned under oath about his/her financial condition.

If a debtor honestly and completely discloses his/her financial affairs, he/she may obtain a discharge of his/her debts.

However, if a debtor is intentionally dishonest, and intentionally fails to completely disclose all of his/her financial affairs, a discharge may be denied or revoked (if successful, existing debts will not be discharged in the current case or any future cases), and a criminal investigation can follow. If convicted of bankruptcy fraud, a person may be fined up to $250,000.00 and/or imprisoned for up to 5 years in a federal prison (for each act).

The United States Trustee's office is responsible for investigating cases of bankruptcy fraud. The Department of Justice is responsible for prosecuting those who commit bankruptcy fraud.

What is Bankruptcy Fraud?

Bankruptcy fraud is a federal crime that occurs when a debtor knowingly and intentionally commits certain prohibited acts in connection with his/her bankruptcy case. There must be actual intent to hinder, delay, or defraud creditors. An honest mistake is ok.

The most common type of bankruptcy fraud is concealment of assets, which involves transferring of assets to a friend or family member, failing to disclose certain assets, or failing to disclose certain income.

The other common type of bankruptcy fraud is making false statements - either in person during a bankruptcy proceeding (like at the Meeting of Creditors or a Rule 2004 Examination), or in sworn documents (like the bankruptcy petition, schedules, or statement of financial affairs).

What Did the Giudices Do?

The Giudices filed Chapter 7 bankruptcy in 2009. However, after signing and filing their bankruptcy petition, schedules, and statement of financial affairs under penalty of perjury, after signing and filing a series of amendments to those documents under penalty of perjury, and after testifying under oath in connection with the bankruptcy proceedings, in 2011, both of them agreed that they should be denied a bankruptcy discharge.

They knowingly and fraudulently concealed the following and testified falsely under oath when questioned about the following:

Their ownership interest in several businesses
Bank accounts that those businesses had
Rental property that they owned
Rental property income
Teresa's true income from "The Real Housewives of New Jersey", website sales, and personal and magazine appearances
Teresa's anticipated increase in income from the upcoming second season of "The Real Housewives of New Jersey"

How Do You Make Sure This Doesn't Happen To You?

Consulting with quality bankruptcy attorneys like us is a good start. We ask all of our clients a series of questions to try to ensure that we have accounted for all of their assets and liabilities. In addition, we conduct our own independent investigation to try to make sure nothing was missed.

We ask our clients about a number of types of assets that they might otherwise forget to list:

Lawsuits they have filed, or potential lawsuits that they could file, involving personal injury claims and insurance claims
Lottery winnings in which payments are to be received over time
Annuities in which payments are to be received over time
Beneficial interests in trusts
Retirement benefits, even if they are not yet receiving them
Inheritances or potential inheritances that have not been sorted out in probate court yet
Co-owned assets (bank accounts, real estate, vehicles, remainder interests)
Transfers of assets to friends and/or family members

The bottom line is that honesty really is the best policy when it comes to filing bankruptcy. There is no doubt that filing bankruptcy will affect your credit score and your ability to obtain credit in the short-term. You might as well do everything that you can to ensure that you get the benefit that bankruptcy is meant to provide - the discharge of debts - by being honest.

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Case Study

In July 2009, Lenny Dykstra, a former Major League Baseball player, filed for bankruptcy. Even though his net worth was estimated to be $58 million in 2008, he listed less than $50,000.00 of assets and between $10-50 million of liabilities on his bankruptcy petition and schedules.

During the case, he was accused of lying under oath, improperly hiding and selling assets, and acting in a fraudulent and deceitful manner. He was also accused of embezzling from his bankruptcy estate, as he sold or destroyed $400,000.00 worth of assets without the court's permission. He faced up to 80 years in prison if convicted of all charges relating to embezzlement, obstruction of justice, bankruptcy fraud, making false statements, and concealing assets. He ended up pleading guilty, and was sentenced to 6 � months in prison, 500 hours of community service, and was ordered to pay $200,000.00 in restitution. He also failed to receive a discharge.

Needless to say, this case study is not one of a former client of Leiderman Shelomith, P.A.!

Blogs

The History of Federal Student Loans

There has been a lot of talk about student loans in the news lately, so we thought it might be interesting to share a bit of history about how the federal student loan program started. Read more.

Beware of Student Loan Debt Relief Promises

If you are like thousands of graduates across the country wondering how you will ever repay all of your student loan debt, it is important to protect yourself from the scam artists looking to take advantage of you. Read more.

Student Loan Default: How to Avoid Wage Garnishment

If your federal student loans are in default status, you have likely started receiving notices from the government. Read more.

How to Know if Bankruptcy is in Your Future

Many individuals across the country are struggling financially, but many of them do not believe that they will file for bankruptcy protection. Read more.

What Happens to My Firearms in Bankruptcy?

Whether or not an individual believes in owning firearms can be a controversial topic. However, it is a right protected by the U.S. Constitution and protected by bankruptcy law. Read more.

Lien Stripping in Bankruptcy: Could it Save Your Home?

If you have more than one mortgage on your home and you are struggling financially, it may be time to consider filing a personal bankruptcy case. Read more.

Honorable Mention

On September 22, 2014, Zach Shelomith was installed as Secretary of the Bankruptcy Bar Association for the Southern District of Florida.

Upcoming Events

Zach Shelomith is going to be a panelist at the American Bankruptcy Institute's 2015 Caribbean Insolvency Symposium (http://www.abiworld.org/CIS15/), which is being held at the Westin Grand Cayman in Grand Cayman, Cayman Islands between February 5, 2015 and February 7, 2015. He is the only panelist from the State of Florida who will be speaking at the session about individual Chapter 11 bankruptcy. The moderator at that session will be Judge A. Jay Cristol, Chief Emeritus of the U.S. Bankruptcy Court for the Southern District of Florida.

In 2006, the Bankruptcy Bar Association for the Southern District of Florida launched Credit Abuse Resistance Education (C.A.R.E.), an outreach program aimed at teaching middle, high school, and college students about financial literacy. The goal of the program is to show young people how to live debt-free by avoiding the temptations of overspending and the abuse of easy credit. More than 20 volunteers - federal bankruptcy judges, trustees, and bankruptcy attorneys - have pledged their time to the program. Felipe Plechac-Diaz volunteers his time to the program. On October 21, 2014, he will be speaking to a class of high school aged students at AMIkids Miami-Dade's South campus (http://amikidsmiamidade.org/), which is one of more than 50 programs across the country affiliated with nationally-recognized AMIkids. AMIkids is a non-profit organization dedicated to providing the community's kids an opportunity to transform into responsible young adults by offering a promising future through positive and motivating programs that inspire learning, leadership, and personal growth.

About Leiderman Shelomith, P.A.

Leiderman Shelomith, P.A. was founded by Jonathan Leiderman and Zach Shelomith in 2003. The firm quickly built an excellent reputation across South Florida as a boutique bankruptcy law firm, handling both personal and corporate bankruptcy matters, including Chapter 7, Chapter 11 and Chapter 13 bankruptcy cases, as well as state court Assignments for the Benefit of Creditors. Felipe Plechac-Diaz joined the firm as an associate attorney in 2014. The firm began representing borrowers with their federal, state, and private student loan matters in 2014, including the defense of student loan lawsuits.

The firm's attorneys have been recognized as a South Florida Legal Guide Up and Comer, a Super Lawyer Rising Star for the State of Florida, a Florida Legal Elite Up and Comer, and a Florida Legal Elite. Our attorneys are members of the National Association of Consumer Bankruptcy Attorneys, the American Bankruptcy Institute, and the Bankruptcy Bar Association for the Southern District of Florida, among other organizations. The firm's attorneys are also frequent lecturers at seminars and community programs, speaking about bankruptcy law to attorneys and the general public.

The firm, Mr. Leiderman, and Mr. Shelomith, are AV� Preeminent Rated Attorney's, awarded by LexisNexis� Martindale-Hubbell�, for having obtained the highest possible peer-review rating for their ethical standards and legal ability.

The firm represents debtors, creditors, and bankruptcy trustees in all aspects of bankruptcy cases, including litigation and appeals, handling both liquidations and reorganizations. The firm also represents borrowers in all aspects of student loan law, including federal, state, and private student loans. Our office is conveniently located in suburban Fort Lauderdale, Florida, and is easily accessible from anywhere in Miami-Dade, Broward, and Palm Beach Counties. We handle bankruptcy debtor cases across the Southern District of Florida, particularly in Broward, Miami-Dade, Palm Beach, and Monroe Counties, and other bankruptcy cases and student loan matters throughout the entire State of Florida.