Am I part of bankruptcy fraud? 6 Answers as of January 12, 2011

I sold a home with my sister. Found out she is in bankruptcy 13 and is trying to hide proceeds of sale from bankruptcy court. Further, she has a high position at the bankruptcy court in Sacramento. I have urged her to disclose this, but she refuses. I do not want to be part of fraudulent transaction? Is there anything I can do to exonerate myself of this illegal real estate transaction?

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Mankus & Marchan, LTD
Mankus & Marchan, LTD | Tony Mankus
If you and your sister sold the home before she filed bankruptcy, she should have declared the sale and any of the proceeds on her bankruptcy schedules. If the home was sold after she filed bankruptcy, she may be OK. You should have no legal obligation as to any action she takes, or doesn't take, relative to her bankruptcy.
Answer Applies to: Illinois
Replied: 1/12/2011
Law Offices of Lady Justice
Law Offices of Lady Justice | Mona Patel
You are not filing bankruptcy therefore you are not providing the courts with falsified documentation, however it sounds as though your sister should seek legal counsel. Honest information should always be provided to the courts. If the court does find fraudulent transactions, the consequences can be harsh, resulting in sanctions, dismissal of the case and the trustee can take hold of any property that he or she may see fit.
Answer Applies to: California
Replied: 1/8/2011
Judith A. Runyon, Esq. Attorney at Law
Judith A. Runyon, Esq. Attorney at Law | Judith A. Runyon
Title 18 of the United States Code Section 152 addresses your question. Basically anyone who violates this code can be imprisoned up to 5 years and fined.

You can contact the U.S. Trustee's office, if you feel a violation of this code has occurred.

Please contact me if you have any further questions.
Answer Applies to: California
Replied: 1/7/2011
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
This might bad, depends on what the order confirming her Chapter 13 Plan says. You should consult with a lawyer in area with is familiar with Chapter 13 cases.
Answer Applies to: California
Replied: 1/7/2011
The Law Office of Mark J. Markus
The Law Office of Mark J. Markus | Mark Markus
Well, that is definitely a difficult situation for you. Was the property sold after she filed Chapter 13? Did she obtain court approval for the sale? If so, then there would be nothing hidden. If she did, then the sale is void anyway as good title cannot be conveyed without bankruptcy court approval and the buyer could come back along and sue you personally (more likely your sister, although if you had knowledge of her bankruptcy, etc. there may be issues).

I honestly don't know what the best thing for you to do is. You can contact the Chapter 13 trustee, either anonymously or otherwise, and inform them of the facts and let them deal with it. Perhaps if you sit down with her and explain that the sale of the property could come back to haunt both of you, she'll back down and follow proper procedures.

My suggestion is that you consult with a bankruptcy attorney up in the Sacramento area who can represent your interests and advise you accordingly. From your standpoint it may be OK to just wait and not do anything, but there are both moral and practical reasons for you to be proactive and deal with this now.
Answer Applies to: California
Replied: 1/6/2011
    Carballo Law Offices
    Carballo Law Offices | Tony E. Carballo
    It is not clear if your sister had already filed for bankruptcy when the house was sold or if she filed after it was sold. It she filed after it was sold, then you are not really involved in anything since it is your sister's responsibility to disclose the transaction in her bankruptcy petition. If the house was sold after your sister filed for bankruptcy, then the sale may be void and she is committing fraud by selling estate property and maybe perjury by not disclosing it among other things. If that is the case, then you need to see a bankruptcy attorney immediately for a private consultation. A lot more information would be needed for an evaluation of the situation if the house was sold after your sister filed for bankruptcy.
    Answer Applies to: California
    Replied: 1/6/2011
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