An Iowa couple was recently sentenced to prison by a federal judge in Florida for using sham transactions to keep their property during a bankruptcy filing.
Fay and Gerald Schuerer have been sentenced to more than two and more than four years in prison, respectively, for defrauding creditors out of more than $350,000 in property, the Iowa City Press-Citizen reports. They were found guilty of bankruptcy and mail fraud in November.
The couple was accused of selling their assets to relatives in Iowa, then moving to Florida to take advantage of the state's liberal bankruptcy exemptions. They reportedly filed for personal bankruptcy there in order to move back to Iowa once the proceeding was complete, and recover their property. The assets that the couple was accused of concealing using this method included a car, boats, stocks and other investments, jewelry and household property totaling up to $380,000 in value.
When a consumer files for Chapter 7 bankruptcy, certain personal assets are liquidated to pay off creditors. Not all of the debtor's assets are liquidated, however - some portion of the value of a home or car may be exempt from liquidation, and the consumer may be entitled to keep certain personal possessions. The dollar value of possessions a consumer is allowed to shield from liquidation depends on state law.