What Happens If The Information On My Bankruptcy Schedules Is Wrong?

30 Jul What Happens If The Information On My Bankruptcy Schedules Is Wrong?

When a debtor files bankruptcy, part of the process requires that they list all assets (all the stuff that they own) and all liabilitlies for the bankruptcy court to review.   This rule has been in place for a long time, but under the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act, the rule was emphasized.  How?  Attorneys must give prospective clients an official “disclosure” about this rule.   Below is an example:


  • All information that you are required to provide with a petition and thereafter during a case under the Bankruptcy Code is required to be complete, accurate, and truthful.
  • All assets and all liabilities are required to be completely and accurately disclosed in the documents filed to commence the case. Some places in the Bankruptcy Code require that you list the replacement value of each asset. This must be the replacement value of the property at the date of filing the petition, without deducting for costs of sale or marketing, established after a reasonable inquiry. For property acquired for personal, family, or household use, replacement value means the price a retail merchant would charge for property of that kind, considering the age and condition of the property.
  • The following information, which appears on Official Form 22, Statement of Current Monthly Income, is required to be stated after reasonable inquiry: current monthly income, the amounts specified in section 707(b)(2), and, in a case under chapter 13 of the Bankruptcy Code, disposable income (determined in accordance with section 707(b)(2)).

So, what happens if you put down wrong information or forget to list an asset?   The worst case scenario was discussed by my colleague, Rachel Foley, a Kansas City, Missouri attorney, in an earlier article on this site, entitled, “Perjury in a Bankruptcy Case Can Land You In Jail!”

The United States Trustee could also decide to bring a lawsuit in the bankruptcy case — the goal of the lawsuit is to have the judge rule that you are not entitled to a discharge of your debts….EVER.  Most debtors get a discharge of their debts, as explained by  Cathy Moran, our Walnut Creek, California colleague in her blog on denial of discharge. 

A step below those two very punishing consequences is having the United States Trustee investigate the circumstances surrounding WHY the information on your schedules is wrong:   this could mean depositions, providing lots of additional information and answering more than the usual amount of questions as the US Trustee (a part of the Department of Justice), decides whether the office wants to prosecute you.   And in addition, you will most likely be paying an attorney to guide you through this process. 

How can you avoid these issues?   By being completely honest, accurate and detailed in filing out your bankruptcy paperwork.  Tell your bankruptcy attorney everything you know about your property; this is one time when TOO MUCH INFORMATION is never too much information.

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I'm a consumer protection lawyer in Oregon, working with people in Klamath; Lake; Jackson; Josephine; Curry; and Deschutes County. I speak regularly on bankruptcy and consumer protection issues nationwide.
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