What do you need to disclose when you decide it’s time to file for bankruptcy? One word says it all: Everything.
A mistake people sometimes make when filing for bankruptcy is not listing every possible creditor, or trying to hide property or other assets. Maybe you are unsure whether an inheritance you have not yet received is relevant to today’s court documents. Or you are trying to protect a family member or creditor you would like to pay back.
But your intentions, even if they are honorable, are meaningless to the bankruptcy courts. Your bankruptcy papers are legal documents signed under penalty of perjury. Filing incomplete or inaccurate forms can mean your case will be dismissed or revoked – or worse. Dishonesty can lead to federal criminal charges if fraud is detected.
A red flag that can seem and feel innocent but lead to legal trouble in bankruptcy is something called “preferential payments.” If you borrow money from your parents to make a mortgage or car payment, for instance and then pay them back a year or less before filing for bankruptcy, you may have acted in violation of the bankruptcy code. Parents, friends, or other relatives, in the eyes of the law, are unsecured creditors and are no different than your Visa or MasterCard.
Key facts to consider when filing for bankruptcy:
- List every creditor – every person or business who claims that you owe them money.
- List any money or other assets you might receive in the future, such as an inheritance, tax refund, life insurance, trust fund, stock options, retirement funds, and even judgments from lawsuits you have or may file related to a personal injury or other legal issues.
- Do not fail to disclose creditors with whom you have a personal relationship to avoid having that debt wiped out. All creditors must be treated the same under the law.
- Do not attempt to hide assets. If the court discovers your deception, the penalties for fraud are serious, and jail time is not unusual.
At Martin Attorneys, PA, our goal is to help you regain control of your finances. To set up a free first meeting with us, please contact us.