08 Sep Do I Really Need to Disclose My Second Job in a Bankruptcy?
Another bankruptcy lawyer recently told me he was meeting with a client in a Chapter 7 case before filing, and was asked, “Does the Court really need to know about my second job?” We smiled and shook our heads (the answer is clearly, “Yes”), but I realized that most people, being completely unfamiliar with the process, don’t really know what information is and isn’t necessary–and what can happen if it isn’t provided. Here’s a short list:
Job/Income Information: You need to tell your lawyer about all sources of your income before the case is filed. This includes second jobs, part-time jobs, jobs where you’re paid in cash, jobs where you’re paid under the table, money you get on a regular basis from your Aunt, rent from your roommate, royalties from that song you wrote years ago, money from a trust or annuity, money from your uncle’s will, retirement, pension, food stamps, unemployment, sales from your hobby, gambling winnings…EVERYTHING. In most cases, disclosing this income won’t have any effect on your case. When judges and trustees see what usually are small amounts on your schedules, it gives them additional confidence that you are being completely truthful in the rest of your schedules.
And even if it does make a difference, don’t forget: the failure to disclose this sort of information might be a criminal violation. Bankruptcy fraud is a federal felony, and prosecutors aren’t likely to be terribly sympathetic when you say you “just forgot.” And even if charges aren’t filed, the failure to be truthful can result in your case being dismissed or your discharge denied.
I always tell clients that if I know about something, I can usually find a way to deal with it. If I don’t know about it at all, I can’t plan for it.
Asset Information: Assets are your “things”: house, car, cash, bank accounts, household good, etc. Here, too, you are required to list anything that has any value…and by “any value” I really do mean “any value”. I ask clients how much change they have in their pocket when the case s filed. I ask for an inventory of household items. Copies of bank statements. Copies of retirement plans. Inheritances you might get. The car and bank account you don’t think you own but your name is on. Whether you have a big screen TV…EVERYTHING.
In the vast majority of cases, telling me about these things doesn’t mean the trustee or the judge will take it away from you. Most of these assets have nominal liquidation value (the standard that is typically used) and we can usually exempt these items, which allows you to keep them. As with your income, listing everything gives the judge and Trustee confidence that you’re being honest in listing what you’re required to. And, as with your income, the failure to list everything might subject you to criminal charges or the dismissal of your case.
Debt Information: Many of my clients tell me that they don’t want to list a particular credit card, or their car loan, or a medical bill, or money they borrowed from a friend in their bankruptcy. I tell them that they don’t have a choice:all debts have to be listed. You can’t pick and choose. Anyone you owe money to, anyone you might owe money to, anyone you don’t owe money to (but they think you do). EVERYONE.
It doesn’t matter how small the bill is (I’ve listed $1.00 debts on schedules). It doesn’t matter if it’s the doctor you’ve been going to for 20 years. It doesn’t matter if it’s a debt to your mom. The Bankruptcy Code requires that you list all debts. And at the Meeting of Creditors, you are usually asked (under oath) if you listed all your debts…and you don’t want to commit perjury, do you?
As I said earlier, in the vast majority of cases, listing the items will have no significant impact on your case. It won’t result in your losing things, or having to pay more. But the failure to list them can cause you BIG problems. Full disclosure really is the name of the game in bankruptcy…and helps prevent you from having problems.
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