TMZ is having a good time with pop singer Aaron Carter’s Chapter 7 bankruptcy case. TMZ reported that Carter listed debts in the amount of $2,204,854, and assets totaling $8,232.16, including “a 61″ flat screen worth $500. He also lists 2 MacBooks, 2 Headset Mics, a Mini Keyboard, Portable Beats, a speaker, a guitar, $60 in cash, Louis Vuitton backpack, a duffle bag and a printer worth a total of $2,500. And he owns a Brietling watch worth $3,750.”
But Carter valued his pure-bred English bulldog “King” at zero.
Many internet blogs and news sources poked fun at Carter’s “worthless” pooch. TMZ later reported that Carter told friends “he devalued the dog because he was worried the bankruptcy trustee would sell King to pay off his creditors.” TMZ speculated that English bulldogs typically fetch upwards of $1,500.
There are several issues that stand out in these stories. First, an asset is rarely worthless – even a family pet. The debtor is under a duty to fairly and accurately identify and value his assets. Second, there is an old saying among trustees, “Never take anything that eats.” The time and costs involved in taking and selling an animal often exceed the recovery from the sale. And third, a debtor should never, ever talk about his bankruptcy schedules to his friends, the press, or anyone other than his attorney.
The amusing story about Carter’s dog has undoubtedly reached the ears of the Chapter 7 bankruptcy trustee, who will certainly take the situation seriously. If Carter “devalued” his dog, the trustee may wonder what other property did he “devalue” for fear that the trustee would take it. Did Mr. Carter also “fudge” on his income, or his expenses, or “forget” pre-bankruptcy asset transfers?
Bankruptcy schedules are statements made under oath to a federal court. That is pretty serious business. Providing false information to the bankruptcy court could result in a denial of discharge, or a criminal charge for bankruptcy fraud. While the rest of Aaron Carter’s bankruptcy schedules may be 100% accurate, a cloud of doubt is now hanging over his case.
Bankruptcy trustees tend to be less understanding or forgiving when dealing with celebrity bankruptcy cases. Just ask Teresa and Joe Giudice, stars of Bravo’s “Real Housewives of New Jersey,” who were recently arraigned on 41 counts of fraud in connection with their bankruptcy filing. It should be an interesting 341 meeting for Aaron Carter and the bankruptcy trustee. The trustee may even take his dog just to prove a very public point: don’t lie on your bankruptcy schedules. Who knows, maybe selling Carter’s celebrity bulldog can help pay his reported $31,166 AmEx bill.
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