Denial of Discharge Due to Fraudulent Concealment of Property

date

Last updated on 

comments

Chapter 7 Bankruptcy

author

Posted by: Moderator

The Sixth Circuit Court of Appeals has ruled on a debtor’s denial of discharge due to the Debtor fraudulently concealing property. A finding of fraudulent concealment must show that the debtor fraudulently concealed property of the Estate after the date of the filing of the Petition. The case In re: Doneta M. Beckham , the Court denied Ms. Beckham’s discharge for the sale of property after the filing of her Bankruptcy petition and her failure to report the proceeds of the sale.

The Trustee showed through documentation that the debtor owned a Kubota tractor prior to filing her petition and failed to disclose the tractor on her schedules filed with the Bankruptcy Court. It was shown through investigation by the bankruptcy trustee that the tractor was in the possession of the debtor prior to filing for bankruptcy and that she sold the tractor for $12,000 after filing her bankruptcy petition. Additionally, it was established that the debtor requested that the proceeds from the sale of the tractor be paid in cash. The debtor failed to disclose her interest in the tractor, the sale, and the sale proceeds in her bankruptcy case even though the sale took place within days of the debtor’s creditors examination.

In an attempt to object to the court’s finding, the debtor asserted that her mother was the owner fo the tractor and named as owner on the documents for the tractor. However, the debtor’s own testimony at the creditor’s examination indicated that her mother passed away prior to the tractor being sold and that the debtor was the beneficiary and executrix of her mother’s estate. The court found that the debtor was the owner of the tractor either by outright ownership or as beneficiary under her mother’s will. Based on these facts, the debtor was found to have fraudulently concealed property of the estate and denied discharge in her bankruptcy case.