The Duty To Disclose: Why Does A Debtor Have To Provide A List Of All Assets?

25 Jun The Duty To Disclose: Why Does A Debtor Have To Provide A List Of All Assets?

As my friend and colleague, Cathy Moran explained in her blog over a year ago, the benefits of filing a bankruptcy mean that the debtor provides information to the bankruptcy court in the papers filed with the court.

This benefits the debtor more than the Court–this honesty.  For full disclosure, the debtor is able to rid himself of dischargeable debt.   So, why  do potential bankruptcy clients frequently leave my office upset and swearing to never tell the Court about their collections of “toys” or coins or guns or whatever?

The attachment to possessions is a powerful attachment.  Some are able to put their lives and personal needs ahead of the need for material possessions; others are not. Some might say that those who chose possessions over their family are confusing wants and needs. Others might say that the possessions are bringing them happiness.   But when the price of happiness is stress, financial distress and loss of significant freedom when the price = hoarding possessions or becoming a criminal  (lying to the bankruptcy court could be charged as a felony), is that true happiness?

The other day, a grown man, in for a consult, threw a tantrum typical of a two-year-old when he was informed that he would have to value his collection of memorabilia, that the value would have to be a realistic value, and that if the value exceeded the exemptions provided for our state, that he could keep the items but would have to pay the trustee the value of those items so that the trustee could pay creditors.

A tantrum.  Lots of head-shaking, “no way”s shouted, and eventually he stomped out, swearing that he would find another way to beat the creditors (this, after he was told that my clients will tell the truth or else they no longer have an attorney).  His possessions, his collection, his keeping that room full of “things” means that he may be looking for a second or third job in order to keep his creditors satisfied.

If he goes to another attorney and doesn’t tell the attorney about the collection, the potential is there for a denial of that man’s bankruptcy discharge (which my Minnesota colleague Craig Andresen explains further in his blog entitled “If I File Chapter 7 Bankruptcy, Will I Get A Discharge?”)

Somehow our society has gone beyond “keeping up with the Joneses” to “whatever it costs the family, we MUST show that we are keeping up with the Joneses”.   Sad commentary given our country’s current economic condition.

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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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