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What Do You Have To Disclose In a Bankruptcy Case?

  • By: Christopher Benson
  • Published: October 15, 2014

There is a famous bankruptcy quote:

A fundamental goal of the federal bankruptcy laws enacted by Congress is to give debtors a financial “fresh start” from burdensome debts. The Supreme Court made this point about the purpose of the bankruptcy law in a 1934 decision:

It gives to the honest but unfortunate debtor…a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.

Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934). This goal is accomplished through the bankruptcy discharge, which releases debtors from personal liability from specific debts and prohibits creditors from ever taking any action against the debtor to collect those debts.

Bankruptcy law in the United States offers consumers a fresh start when debt due to any circumstance becomes too much to handle in daily life. The exchange we make for that debt forgiveness is total transparency and honesty with the court when filing for bankruptcy.

Failing to disclose everything to the court during a bankruptcy proceeding can result in a denial of discharge, criminal charges, fines, and even prison time. So how do you avoid any possibility of being accused of fraud during your bankruptcy filing?

  1. Handle your finances prudently leading up to bankruptcy. The courts look just as carefully at your behavior before you file as they do your behavior after filing. Did you run up a bunch of debt right before you filed bankruptcy? Did you buy a bunch of expensive luxury items or otherwise act irresponsibility? You will be held accountable for all your financial behavior during the bankruptcy look back period, so act accordingly.
  2. Hire an attorney. The federal bankruptcy code is massive, and the paperwork is, too. Attorneys are well worth it in the bankruptcy process in helping to make sure everything is done by the book. If you do hire an attorney that suggests you hide accounts, use fake documentation, or falsify documents, find a new one.
  3. Use documentation. Don’t attempt to guess the values of items or what you made last year. Back it up with documentation. Find the paperwork for every number you need in case that number is called into question to be sure that mistakes are not misconstrued at an attempt to defraud the court.
  4. Double-check everything. People make Go over every number and sum that you submit to the court to be sure it’s accurate. Do like your fifth grade teacher told you and always double-check your work.
  5. Tell the court if you find an error. If you do find an error in a number, income, or asset, report it to the court immediately. You will be looked upon much more favorably if you self-report the error than if your trustee discovers it.

Over the past 23 years, the Law Offices of Christopher A. Benson has helped over 2,300 of Washington clients take control of their financial situation. We can stop your garnishment and change your monthly payments for all your combined unsecured debt, and if you have had more than $600 garnished within the last 90 days, we can get all of the money back in most cases. But you have to act quickly–call (253) 815-6940 for your free consultation, or email us today. Evening and weekend appointments available.

Christopher Benson

About the Author Chris served on the Board of Directors for Habitat for Humanity
Seattle/S. King County for 10 years and served as Vice President
of the organization during part of that time. Read More