Bankruptcy Disclosure Laws
If you’re about to file for bankruptcy or you’ve begun the process of filing, you already know the answer to this question.
The answer is everything.
You must disclose all of your financial information when you file for bankruptcy. Failing to do so can jeopardize your case.
Most people file for bankruptcy to get their debts discharged. This means they will no longer be legally obligated to pay what they owe to creditors. The price of receiving this discharge is disclosure. You need to share all of your financial information with the bankruptcy court before they’ll consider discharging your debt.
Not keeping up your end of the bargain puts you at risk and could get you into a whole lot of trouble. Failing to disclose all of your assets in a bankruptcy petition is considered lying to the court and the penalties can be just as severe as if you gave false testimony under oath in a courtroom.
What If I Forget a Debt?
Even if your failure to disclose information was an honest mistake, you can still face penalties.
As a matter of fact, most failures to disclose are mistakes and the person filing for bankruptcy had no intention of concealing his or her assets, but it doesn’t matter. Failing to take your obligations seriously is just as bad as intentionally concealing assets.
If you’re beginning the filing process, it’s important to carefully read the questionnaire and provide all of the requested information. Take your time and think about the questions you are asked. Don’t dismiss an asset because it has a small market value or because you don’t think it’s important. Bankruptcy schedules ask for information about all of your assets, not just the ones that are significant or that have value.
You give the info and the court decides what to do with it.
Chances are the court won’t be interested in the majority of your assets. You won’t need to worry about the bankruptcy court taking most clothing or furniture items if you disclose the ownership of them. You’re putting more at risk by not disclosing than you are by fulfilling your obligation.
Don’t Assume Something Isn’t an Asset
It’s also important to realize what constitutes an asset. Are you waiting for or have you received a class action settlement? Are you collecting on a workers’ compensation claim? You need to include these items on your bankruptcy petition. All assets must be listed even if you think you have a legal right to keep those assets.
If you’d like to know more about what is considered an asset in bankruptcy, this information from Legal Zoom can help.;
Your attorney can help you understand the consequences of disclosing assets and explain why it’s always smarter to disclose than not disclose. He or she can also help you exempt certain assets if they are eligible and you want to shield them from the trustee.
The important thing for you to remember as someone filing for bankruptcy is that your loss is almost always far less than the value of the discharge you’ll receive when your bankruptcy is completed properly.