If you’re struggling with debt, a bankruptcy filing may be able to offer you financial relief.
However, before filing bankruptcy, make sure you’re clear on the importance of being transparent during the process.
If not, your Chapter 7 or 13 bankruptcy case could be thrown out and you might even get pressed with fraud charges.
Don’t worry too much about simple mistakes that find their way into a filing by accident.
A few oversights or errors probably won’t ruin your petition and you will likely be given a chance to correct them; however, double-check all the information before filing, as the bankruptcy court does not readily tolerate a hastily-created petition.
When you file bankruptcy, you’ll have to verify via your signature that the information contained on your forms is “complete and accurate” to the best of your knowledge.
Filling in your signature on that final page opens you to a charge of perjury (lying under oath) if it’s discovered that you lied or misstated information on your bankruptcy forms.
Deliberate omission of requested information could also lead to serious repercussions. You should not leave anything out of your filing, including any income, property or debts.
Extensive mistakes and/or omissions in your filing may be seen as carelessness by the court.
Some courts may dismiss your case on the grounds that you’ve shown “indifference to the truth.”
If the court believes that the mistakes are deliberate, you might be charged with bankruptcy fraud, which is a serious crime.
Any complete report of your debts should include debts that you don’t think you owe (even though a creditor disagrees).
Do not omit these debts; simply note that they are “disputed.”
If you are engaged in other legal action regarding that debt, list it as “contingent,” which indicates that your responsibility to pay depends of the outcome of that case.
You may be tempted to omit creditors that you like, including friends or business owners you have a relationship with in an effort to make sure these parties are paid back in full.
Although your motives may be well intended, remember that any omission could be considered bankruptcy fraud.
Bankruptcy involves the fair distribution of assets and personal relationships are not considered in the process.
If you know that you will be receiving money or property in the near future (possibly as the result of a lawsuit settlement or inheritance), you should disclose this information during your bankruptcy.
As in many of the above considerations, a bankruptcy lawyer can help you determine what such assets need to be listed on your forms and explain bankruptcy laws in more detail.
Any bankruptcy filing includes a significant amount of information that must be disclosed in a very specific way.
It’s a tall order for anyone, and a lawyer can provide you with a great deal of assistance managing the process.