Include lawsuits in your bankruptcy schedules!

16 Aug Include lawsuits in your bankruptcy schedules!

You’re filing a bankruptcy case. You’re suing someone. You don’t have anything yet. Your lawyers says she’s not sure your suit is worth anything. So you don’t have to schedule it on your bankruptcy papers. Right? Wrong! Big time wrong!! Your bankruptcy schedules constitute your statement under oath that you didn’t have a claim. It is an admission that you had no lawsuit or claim at all. So the doctrine of judicial estoppel will be used against you and you will be stiff out of luck. Too bad. No doubt you are strapped if you are filing bankruptcy. Your suit might even be the reason you’re strapped. Maybe you had big medical bills. But if you don’t list your lawsuit, the trustee won’t know about it. If the trustee doesn’t know about it, then he might file a no asset report. Then you’re home free, right? Wrong again! The defendant in the lawsuit will find out someday that you filed a bankruptcy. Then what happens? The defendant will tell your trustee. Your trustee will reopen your case. You will probably end up losing your discharge. And even if the lawsuit results in enough money to pay your creditors in full, your failure to list the lawsuit in your bankruptcy papers will be used against you.

So if you are filing a bankruptcy case, list all your assets. And that includes all lawsuits you have against anyone for anything. It includes any claims you have even if you don’t know what their worth. It includes any claims you have even if there are significant defenses to the suit. Don’t get thrown out of court by playing it cute in your bankruptcy case.

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Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.
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