For the most part, bankruptcy is largely a trust process. What this means is that it is extremely unlikely that any court representative or creditor will ever come to your home and take an inventory of what you own. The trade off for that is that you have to swear under penalty of perjury that everything in the bankruptcy petition and schedules is true and correct to the best of your knowledge. You will also be testifying to that effect in front of a Bankruptcy Trustee. The only way you can get in trouble in a bankruptcy is if you lie or hide something. The most common examples of this are that someone will hide property (usually by giving it to a family member) or lie about their income. Committing perjury (lying under oath)in a bankruptcy can have absolutely horrible consequences, including seizure of assets, the revocation of the bankruptcy discharge, and potential jail time and fines.
Here in the Dallas/Fort Worth area, there was a famous case a few years ago where a pharmacist filed for bankruptcy. He had hidden nearly $6 million dollars in cash in his house when he filed for bankruptcy. He disclosed none of that money in his case. In a bankruptcy case, that money would have been used to pay off his creditors. Federal agents later raided his home and found all of the money in various hiding places. The pharmacist is now serving 14 years in federal prison, and he also had to forfeit all of his money. More information on the case can be found at: http://www.dallasnews.com/news/crime/headlines/20130717-colleyville-pharmacist-and-son-get-prison-time-for-tax-fraud1.ece. More recently, a reality television star from the Real Housewives of New Jersey has been indicted for bankruptcy fraud for lying about their income. More on that story can be found at: http://www.nj.com/entertainment/index.ssf/2013/09/trial_real_housewives_teresa_joe_giudice_postponed.html.
So what is the moral of the story? If there’s a lesson to be learned it is that in bankruptcy (and out), honesty is always the best policy. A competent bankruptcy attorney can help you overcome many issues. Anything you tell an attorney is covered by attorney/client privilege so make sure that you always give your attorney the complete picture, ugly or not. The only way you can truly get in trouble in bankruptcy is by not telling the truth. If you have complicated issues that you want an attorney to look at, come visit with the attorneys at the Fears | Nachawati Law Firm. Our successful bankruptcy attorneys can help you sort out your financial issues and put you back on the right track to financial stability. To set up a free consultation, click here or call our office at 1.866.705.7584.
