Be Sure to Disclose Assets in Bankruptcy Proceedings
An intentional failure to disclose assets in your bankruptcy can result in having your bankruptcy dismissed without discharge; imposition of fines, sanctions and penalties or even criminal prosecution for both you and your attorney. Your attorney should make it clear to you that it’s imperative for you to be completely honest regarding all of the necessary disclosures. Your attorney cannot be expected to provide you with accurate legal advise or legal services if you fail to provide full and complete answers, and documents when necessary, for everything that is being asked of you.
Being willfully selective with the intention of ultimately filing false information in your bankruptcy is a Federal offense that the bankruptcy trustee handling your case must report to the United States attorney for further investigation that may result in prosecution and felony convictions. The maximum penalty at the time of this writing for Bankruptcy Fraud under Title 18 § 157 is either a fine, imprisonment up to five years or both. The intention to defraud by making false or fraudulent representations, claims or promises in relation to the proceedings of a bankruptcy, at any time before or after the filing or in relation to a proceeding falsely claimed to be pending, may all give rise to violations under Title 18 § 157.
You must be truthful with your attorney and the bankruptcy trustee assigned to your case. Keep in mind that the trustee will effectively be conducting their own independent investigation regarding your filings that will include, at minimum, placing you under oath to answer questions concerning your filings and financial affairs. The trustee often tries to determine whether the debtor has more assets then either, what they have disclosed in their filings, or beyond what they may even be aware of.
You may be concerned that you may not qualify for filing under Chapter 7 because of your income and/or assets. However, your attorney should be able to determine whether you will qualify or not. Additionally, your attorney may be able to counsel you in a manner that may ultimately result in your honestly being able to qualify for filing bankruptcy. It may be as simple as delaying the time that you file for a short period of time. For the purpose of ascertaining a client’s eligibility to file bankruptcy under Chapter 7 many law firms are prepared to run the “means test” for free. If a law firm is taking the time to perform the required calculations for the means test you would be extremely well advised to be completely honest with how you respond to all the questions asked of you.
If one law firm advises you that you won’t qualify to file under Chapter 7 and you respond by turning to a different law firm providing the new firm with false or misleading information then you may also want to look into a good criminal defense attorney as well.
This blog post shouldn’t alarm anyone who makes a genuine attempt at being completely honest with what they represent when filing bankruptcy. You should expect any honest mistakes that surface to be treated in a fair and reasonable manner. Further, for much of what is necessary when filing bankruptcy you may only be expected to provide good faith estimates regarding the value of some of your assets. The trustee may explore how you determined the value of your pet cat but he likely won’t spend any more time on the subject then it may take to lighten the mood and elicit a laugh.