Lie To The Bankruptcy Court At Your Peril!

by Adrian Lapas, Esq.

May 11, 2010

Recently in United States v. Boulware (09-5125), the Court of Appeals for the Fourth Circuit affirmed Ms. Boulware’s perjury conviction for lying on her bankruptcy petition.  Briefly, since 1995, Ms. Boulware filed for bankruptcy protection 16 times in three different districts.  In May, 2007, the bankruptcy court entered an order dismissing her case and prohibited her from filing bankruptcy for a period of five years.  Three months later, Ms. Boulware filed another bankruptcy petition in a different district but omitted her previous nine filings within the past eight years as required under the Bankruptcy Code.  Because of this omission, Ms. Boulware was charged with “knowingly and fraudulently making a false declaration, certification, verification and statement under penalty of perjury” and with resisting a lawful order of the Court of the United States.  Ms. Boulware was sentenced to fifteen months by the District Court and this sentence was affirmed by the Fourth Circuit.

When you file for bankruptcy protection, you are required to divulge certain information to the Court.  You make these statements under penalty of perjury and you are certifying that everything you state in your bankruptcy schedules and Statements of Financial Affairs is true and accurate.  As Ms. Boulware found out, the government takes this certification very, very seriously.  As one of our chapter 7 trustees is fond of saying, “don’t try to hide your bass boat behind the shed at your brother-in-law’s house.  I’ll find it and when I do, we’re gonna have a problem.”  Perjury and bankruptcy fraud are problems that are easily avoided.  

When it is understandable to want to retain as much “stuff” as possible, lying to the bankruptcy court is not a winning proposition.  As your bankruptcy lawyer will tell you, if you wish to retain your “stuff,” most states allow you to retain a certain amount of property that is designated as “exempt.”  In fact, in most cases, people are allowed to keep all of their “stuff” (within allowed exemptions).  If you have additional items that you wish to keep that you cannot exempt such that you might be tempted to fudge on telling your lawyer or the bankruptcy court, ask yourself if it is worth fifteen months in prison.

While the Boulware case is about sentencing issues, it still serves as an important warning that you must accurately disclose all of your assets and be truthful in your dealings with the bankruptcy court.

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Adrian Lapas, Esq.

I've been practicing bankruptcy law in North Carolina since 1993, and am certified as a specialist in consumer bankruptcy law by the North Carolina State Bar.

Last modified: May 11, 2010