Bankruptcy is NOT for Liars, Cheats, Crooks

24 Jun Bankruptcy is NOT for Liars, Cheats, Crooks


Bankruptcy is not for liars, cheats and crooks. Debt discharge is reserved for honest, but unfortunate, debtors who need a fresh start in life.

If you do not want to come clean and make a full and honest disclosure of all your financial affairs, bankruptcy is not for you. Only people who tell all there is to tell about their money and property and answer all questions truthfully and completely, no matter how embarrassing it is, and disclose all their property are eligible for a discharge of their debts. If you want to lie, hide and cheat, forget about it.

Or, if you have lied to your creditors in the past and your lenders have relied on your lies when loaning you money, you will not be rewarded with a discharge of your debts in bankruptcy. This is called fraud and fraud is not welcome in the bankruptcy system.

Criminals cannot commit bad acts and find a safe haven in bankruptcy. Fraud, theft, deception and other crimes are reasons to reject a debtor’s petition for relief.

If you have been cheating on your taxes and not reporting all your income, stay away from bankruptcy. You have to report all your income on your schedules. Were you lying on your tax returns then or are you lying now? Either way you will get caught.

If you have given away your property or sold it cheap to a friend to hide it from your creditors, or want to omit assets on your paperwork, stay away from bankruptcy. The trustee will get it back, ask the judge to deny your discharge, and report you to the Federal Bureau of Investigation. Fibbing about the value of your stuff doesn’t work either. Your trustee will check and take it.

The scrutiny of the federal court proceeding will bring unwelcome spotlight on dishonest activities. Filing a bankruptcy petition is done under penalty of perjury, meaning it is a crime to lie. Lying, actively or by omission, hiding property or improperly transferring money or property, are federal crimes. Bankruptcy crimes are reported to the FBI and prosecuted by the U.S. Attorney.

Remember that Chicago mobster Al Capone went to Alcatraz penitentiary for tax evasion (not reporting income from illegal enterprises) not his gangland violence.

Liars, cheats and criminals: stay away. You make it difficult for the millions of honest people who have fallen on hard times and need the debt relief that bankruptcy brings. Your dishonesty makes creditors and trustees suspicious of everyone who has fallen on hard times and needs a fresh start. Because of you, there stern warnings. Because of you, there are audits of paperwork seeking out material misstatements. Because of you, there are investigations.

Fortunately, the bad apples are a tiny fraction of debtors. Denials of discharge and criminal prosecutions are rare. Most debtors are honest.

The vast majority of Americans who file bankruptcy are ordinary people in bad circumstances, many of whom had experienced health issues, job loss or divorce. They cannot pay their bills through no fault of their own. They are good, honest folks who are granted the much needed relief they seek.


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Jill Michaux has helped Kansas consumers with debt problems for three decades. She and her partner, Mark Neis, are Topeka's only bankruptcy specialists, board certified in consumer bankruptcy law by the American Board of Certification. She help start the National Association of Consumer Bankruptcy Attorneys.
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