Can You Be Bankrupt and Live in a Mansion?

Todd Chrisley, of the new reality show “Chrisley Knows Best,” filed for Chapter 7 bankruptcy to resolve $49.4 million of debts, but he still looks mighty rich in his lavish 30,000 sq. ft. Atlanta mansion. What gives?

Contrary to popular belief, there are certain assets you can keep when you file for Chapter 7 bankruptcy. But there are also penalties when you try to hide your assets.

Chrisley is currently caught between these two rules.

Can You Keep House in Chapter 7?

Though Chapter 7 bankruptcy involves liquidation, not all assets must be sold off. Some assets are exempt from liquidation, such as your primary residence. That’s why Chrisley and his eerily white smile have been able to stay in his Atlanta McMansion.

Chrisley has mortgages totaling $12 million. It’s unclear whether he’s delinquent on his payments. If so, that could become an issue.

In order to keep your house, you must make arrangements acceptable to your mortgage lender to catch up on any delinquent payments you owe. Then, it will be up to the lender to decide whether to work with you and keep your house out of foreclosure.

What Happens When You Hide Assets?

The more “creative” (read: unlawful) way to keep your assets is to hide assets. This is typically done by filing false or incomplete schedules (namely, by not listing all of your assets) or by giving false testimony in a bankruptcy case.

In Chrisley’s case, the court-appointed trustee was suspicious that Chrisley transferred some of his wealth to his wife to protect his assets, People reports.

Despite being unemployed since 2012, they “continue to live in lavish residences, drive expensive vehicles and travel extensively” he wrote.

The trustee is also concerned Chrisley is low-balling the value of his assets. In his petition, Chrisley claimed his clothes were worth $650. But in reality, the trustee pulled his receipts from American Express, Louis Vuitton and Saks Fifth Avenue, revealing he spent thousands on clothing.

If Chrisley fraudulently transferred his property (either before or after filing for bankruptcy) or made false representations, his actions would constitute bankruptcy fraud. His conduct could give rise to a denial of discharge, not to mention possible criminal charges, punishable by a $5,000 fine and five years imprisonment for each incident.

Fellow reality stars Teresa and Joe Giudice of “The Real Housewives of New Jersey” recently learned that the hard way.

Related Resources:

• Talk to an Atlanta Bankruptcy Lawyer (FindLaw)
• Can I Keep My Credit Card After Filing Bankruptcy? (FindLaw’s Atlanta Bankruptcy Law News)
• 3 Things to Do Before You File for Bankruptcy (FindLaw’s Atlanta Bankruptcy Law News)
• 5 Facts You May Not Know About Bankruptcy (FindLaw’s Atlanta Bankruptcy Law News)

Source: http://atlantabankruptcynews.com/2014/03/can-you-be-bankrupt-and-live-in-a-mansion.html