Bankruptcy and Offshore Bank Accounts

Some people choose to do some or all of their banking in foreign bank accounts. These banks can provide financial privacy for account holders, but all foreign holdings must be reported during bankruptcy proceedings. Not declaring your offshore holdings when filing for bankruptcy can lead to charges of bankruptcy fraud and tax evasion.

Banking laws in the United States and many other countries require banks to report information on transactions and accounts. The purpose of these requirements is to discourage or prevent dishonest and illegal activity. If banks are allowed more secrecy, the argument goes, it becomes easier for banks and their clients to commit fraud, money laundering, and other crimes.

Not every nation agrees, however. Some nations place a much greater emphasis on business and financial privacy. Switzerland is famous for its approach to secret banking, but in recent years its banking information has been made more public. Most overseas bank accounts these days are in island nations, some of which use offshore banking as a major source of income.

Although these nations are of course able to make their own laws, American citizens can be held accountable for not reporting their financial information. Even if the money was earned elsewhere, all American citizens are required to report all foreign holdings when filing taxes or filing for bankruptcy. Failure to do so can invite criminal charges and possibly jail time.

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If you are considering filing for bankruptcy, do not take the risk. Report all of your holdings, no matter where the bank is located. By working with an experienced bankruptcy lawyer, you can minimize the negative effects of bankruptcy on your finances without committing fraud. To learn how they can help you, contact the West Palm Beach bankruptcy attorneys of Eric N. Klein & Associates, PA today at 561-353-2800