Foreign Assets and Offshore Property Requirements for Bankruptcy

In the past, we have received inquiries from our clients regarding what they have to do with their foreign assets in a bankruptcy.  Foreign assets, commonly known as offshore assets, are assets owned by a debtor that are located in a foreign country.  It can be a car located in South America, money in a bank account in Europe, or a house in Asia.

Oftentimes, people think that they do not have to list such assets in their bankruptcy because they are not located in the United States.  This is a misconception.  When you declare bankruptcy, you are required to make a full and accurate disclosure of all your assets and debts under penalty of perjury.  Since your offshore properties belong to you, you must list them as your assets in your bankruptcy petition.  If they cannot be exempted and protected in bankruptcy, then the Trustee can seize them and sell them off to pay back your creditors.

If you fail to disclose your foreign assets or offshore property in your petition and the Trustee discovers them, several things can happen.

What Happens if I Do Not Disclose My Foreign Assets

First, you will not be able to discharge your debts.  If you hide assets from the bankruptcy court, the court will not entitle you to receive a discharge.  If you do not receive a discharge, you will continue owing all of your debts.  Furthermore, the Trustee can also object to the discharge of your debts.  The Trustee can do this at any time during the duration of your bankruptcy.

Next, the properties that you own in the United States may be seized by the Trustee and sold to pay back your creditors.  If your seized assets do not cover the debts you owe, you will continue owing the difference.

Third, the debts of your current bankruptcy will not be dischargeable in subsequent bankruptcies as a consequence for hiding assets.

Finally, and most seriously, you could face criminal charges for lying under oath.  You may be investigated by the US Trustee’s Office and the FBI, and the penalty for making a false statement under penalty of perjury and concealing property could be a monetary fine or imprisonment, or both.

Therefore, it is serious misconduct if you fail to disclose your offshore assets.  They must be listed in your bankruptcy petition even if they are located in a foreign country.