Failing to Disclose Diamond Ring Thrown in Lake Blocks Ch. 7 Discharge

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By Diane Davis

A couple who failed to disclose a $46,000 diamond ring, and a cabin they had a lease interest in will be denied a Chapter 7 discharge, the U.S. Bankruptcy Court for the District of Idaho held.

“All property and interests in property must be disclosed, even if debtors believe the assets are worthless or unavailable to the estate,” Judge Terry L. Myers wrote Jan. 5.

Tim and Kim Resler intended to hinder, delay, or defraud the trustee by concealing the ring, the court said. They also knew their oaths were false and done to prevent the trustee from discovering the existence of the ring or the cabin, the court said.

The U.S. Trustee met her burden of showing that Tim and Kim’s discharges should be denied under Bankruptcy Code Section 727(a)(2) and (a)(4), the court said.

The diamond ring was allegedly thrown into a nearby lake less than two months before filing bankruptcy after Kim and Tim had a fight over Tim’s marital affair. It was appraised at more than $46,000 when it was added as a rider to their home insurance policy.

The Reslers said they inadvertently forgot to include the ring in their bankruptcy paperwork because they didn’t have it. Kim said she had forgotten about the ring when the trustee asked her about the rider at the creditor’s meeting. She said it was her sister’s ring on the policy.

Before trial, Tim hired a scuba diver to find the ring and he was successful. The ring was later turned over to the trustee.

Tim had a prior lease interest in the High Valley cabin, but later terminated that interest. His son Jeff signed a similar transfer agreement. Tim had an opportunity to disclose his interest in, or transfer of, the cabin, but failed to do so, the court said.

Matthew Todd Christensen, Angstman Johnson, PLLC, Boise, Idaho, represented the Reslers; Patrick John Geile, Foley Freeman, PLLc, Meridian, Idaho, represented Jeff Resler; Jed W. Manwaring, Boise, Idaho, represented Trustee Janine P. Reynard ; and U.S. Trustee David Wayne Newman, Office of U.S. Trustee, Boise, Idaho, represented himself.

The case is United States Tr. v. Resler (In re Resler) , 2018 BL 4645, Bankr. D. Idaho, Case No. 15-00477-TLM, Chapter 7, Adv. No. 15-06062-TLM, 1/5/18 .

To contact the reporter on this story: Diane Davis in Washington at ddavis@bloomberglaw.com

To contact the editor responsible for this story: Jay Horowitz at jhorowitz@bloomberglaw.com

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