When I meet with clients I discuss how it is important that they disclose all of their assets, all of their debts, and be completely truthful on the information that we provide to the bankruptcy court. Periodically after I give this admonition a client will ask “but how will the bankruptcy court know I have an asset if I don’t put it on my schedules?” The short answer is, because you just told me. While your attorney in the bankruptcy proceeding is your advocate before the court and is there to help you through the bankruptcy process, attorneys are governed by strict ethical rules as well as under the bankruptcy code be completely honest in its dealings with the bankruptcy court — even if that means disclosing assets that you don’t want disclosed.
Failure to Disclose Assets in a Bankruptcy Case is a Felony
Not only is it unethical to conceal assets, it is also a crime. You will be required to sign your bankruptcy documents before they are filed by your attorney. By signing those documents you are attesting that everything in them is true and correct to the best of your knowledge. Your attorney, the bankruptcy court, and the US Trustee’s office take this oath very seriously, and so should you. The penalties for intentionally concealing assets in a bankruptcy case can result on the low end to the dismissal of your case and the denial of a discharge (the whole purspose you went through this process) to being charged with a crime and face prison time. Judges do not have a problem with handing down prison terms for those who are intentionally concealing assets.
I Forgot to Include an Asset, Now What?
It is not uncommon that after a case is filed a client will approach me and inform me that they had forgotten about an asset or just simply failed to include it their paperwork. If this happens to you, let your attorney know so that he/she can amend your filings with the court. In situations where there has been an honest mistake the amendment of the bankruptcy court documents will usually suffice and your case will continue on.
When in Doubt, Disclose
When you are meeting with your attorney in the beginning stages of bankruptcy, disclose EVERYTHING. More times than not, if there is a problem, if you disclose it prior to filing your bankruptcy case your attorney can advise you of the best route to go and help you avoid a lot of stress and heart ache down the round. Most problems can be solved prior to filing, however after the case is filed it can be more difficult. Put trust in your attorney and disclose all assets, all debts, and all information your attorney needs to prepare your bankruptcy documents.While in Arizona it is not the norm for a trustee to visit your home and take an inventory of your items, recently a case arose where a trustee was informed by an ex-spouse that the Debtor had failed to list various assets. The trustee showed up at the Debtor’s home, unannounced, and was able to locate significant amounts of undisclosed property. This could result in significant problems for this Debtor.
Bankruptcy can be a fairly straight forward process with few bumps in the road. However, the easiest way to cause a delay in your discharge order being entered and possibly more severe sanctions is to fail to disclose all of your assets. Disclose, disclose, disclose…
I offer a free bankrutpcy consultation where we can discuss your specific situation. I can be reached at (480) 648-8975.