After more than 20 years of representing debtors in consumer bankruptcy cases, I believe without reservation that the vast majority of Chapter 7 and Chapter 13 debtors are honest, hardworking people who end up filing bankruptcy as a last resort. At the same time I recognize that bankruptcy debtors sometimes get themselves in trouble when they fail to disclose information to me that doesn’t seem particularly important, but, in reality is very important. If you are getting ready to file, or if your case is still active, here is a brief checklist of potential problem areas:
- failure to disclose assets – any asset that you own must be disclosed in your bankruptcy case. Did your elderly mother in a nursing home add you to her bank account as a matter of convenience? You most likely have ownership in that bank account even if you don’t consider the money to be yours. Do you have a possible claim against someone. Even if your currently don’t intend to pursue it, you should list it, otherwise your failure to disclose may very well estop you from pursuing that claim. Don’t guess about whether you own something – ask your lawyer
- failure to disclose the transfer of an asset – did you give your brother your beat up old 1985 Chevrolet pickup, but had him transfer the title back to you earlier this year when your lawyer told you that giving away property was not permitted? You could have a problem – reversing a transfer doesn’t mean that the transfer did not happen and you could lose your bankrutpcy discharge as a result.
- failure to list creditors – in my practice I ask all of my clients to request copies of their credit reports. Inevitably a claim shows up that you forgot about. Failure to list a creditor may mean that the debt owed to that creditor is not discharged.
- hypothetical questions – I get very nervous when a client says something like “hypotheticlaly speaking, if I did own a 1/16th interest in a family corporation that owned 500 acres of property would that be a problem?” The Bankruptcy Code requires me to make a diligent inquiry into the full financial picture of my clients. This type of question would lead me to believe that my client was not being totally honest with me – and I am not going to risk my law license over one case.
- A similar phrase that I do not like to hear is “just between you and me,” or “you are my lawyer and everything I tell you is confidential, right?” These phrases suggest that a debtor wants me to “look the other way” and help him commit fraud. This I will not do for anyone.
One of the big trends that has arisen in the bankruptcy landscape post October 17, 2005 is the elimination of good faith estimates and best effort discloures. Pre-October 17, 2005 there was a certain casualness about bankrutpcy filing – that casualness is now gone.
Expect to spend several hours with your lawyer preparing your case and be wary of lawyers who shuffle you off to paralegals or legal assistants.
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