Upon satisfactory proof, as provided in the bankruptcy law, that a bankrupt is about to leave the jurisdiction and thereby hinder the proceedings in bankruptcy, the court may order the marshal to detain the bankrupt.
The law provides for the detention of the bankrupt where proof is offered, on the affidavit of at least two persons, that he is about to leave the jurisdiction, and the Court finds that the allegations are true and that his going would hinder the bankruptcy proceedings.
The bankruptcy law creates offenses and provides for their punishment.
In order to more surely secure observance of the provisions of the bankruptcy act by the bankrupt and others, the law creates offenses and provides for their punishment. They are as follows :180
(1) Concealment by the bankrupt of his assets - punishment, imprisonment not to exceed two years.
(2) Making of false oaths or accounts - punishment, same as above.
(3) Extorting money as a consideration for acting or refusing to act in bankruptcy - same punishment.
Besides these offenses, a bankrupt may be guilty of the offense of contempt of Court, for refusing to obey the lawful orders of the Court.
"This Act shall not affect the allowance to bankrupts of the exemptions which are prescribed by the state laws in force at the time of the filing of the petition in the state wherein they have their domicile for the six months or the greater portion thereof immediately preceding the filing of the petition." 181
180. Bankr. Act, 1898 SEC. 21.
(1) Bankrupt entitled to exemptions.
A bankrupt is entitled to the exemptions allowed by the law of the state in which he lives. This, of course, means that a bankrupt in one state, in claiming the exemptions of that state, may have greater or less exemptions than a bankrupt having his domicile in another state. That this does not prevent the law from being a "uniform" law, as required by the Constitution, has been discussed elsewhere.182
(2) Must specifically claim exemptions.
The bankrupt, to entitle himself to his exemptions, must claim them. He must include the property claimed in his schedules and then claim it with sufficient detail to identify it. He cannot omit it from his schedules merely because he regards it as exempt.183
The Act provides :184
"The bankrupt shall * * * (8) prepare, make oath to, and file in court within ten days, unless further time is granted, after the adjudication, if an involuntary bankrupt, and with the petition, if a voluntary bankrupt, * * * a claim for such exemptions as he may be entitled to, all in triplicate * * *."
If he does not claim his exemptions as required by the law he loses his right to them.
181. Id. SEC. 6.
182. See SEC. 4, supra.
183. In re Royal 112 Fed. 135.
184.Sec. 7 (8)
(3) Right to exemptions depends on law of the state.
Whether the bankrupt is entitled to exemptions and to what exemptions is determined entirely by the law of the state at the time of filing the petition.185
Exemptions are chiefly of three sorts: in personal property, in real property (homestead) and in earnings. Under some laws specific sorts of property are exempt (as working tools, etc.) without regard to value, while in others the debtor has a right to select a certain amount of property up to a certain value.
The bankrupt is not entitled to exemptions unless under the law of the state he would be so entitled when the petition was filed. Thus in one case186 it was held that under the laws of the state of Colorado a debtor is not entitled to a homestead as exempt unless he enters his claim on the margin of the record title to the property. If, therefore, prior to the filing of the petition this had not been done, the bankrupt was not entitled to such exemption.
(4) Conversion of non-exempt property into exempt property prior to bankruptcy.
A debtor may convert non-exempt property into exempt property at any time and creditors although existing at that time, cannot object. Thus if a debtor has $1,000 cash, and the law allows him a homestead as exempt, he may after incurring debts and even when insolvent (but not yet bankrupt) put the non-exempt money into the exempt homestead and thus deprive his creditors of resort thereto, and prevent the trustee in bankruptcy from taking title thereto.187 While this is the general rule, the bankrupt cannot be guilty of actual fraud upon his creditors. Thus it was held188 that where a debtor instead of depositing funds from his business from day to day as had been his prior practice, put same in vault or retained same upon his person, until he accumulated $13,000, which he put into a homestead and moved his family therein one month before filing his petition, this was a deliberate attempt to defraud, and the exemption would not be allowed.
185. Libby v. Beverly, (C. C. A. 5th Cir.) 263 Fed. 63.
186. Edgerton v. Taylor, ( ) 270 Fed. 48.
187. Crawford v. Sternberg, 220 Fed. 73.
188. Kangas v. Robie, (C. C A. 8th Cir.) 264 Fed. 92.