In the same way that potatoes are an essential ingredient for potatoes au gratin, and the most important part of a swimming pool is the water (duh!), a bankruptcy requires full transparency in order to be successful. Needs it! In other words, it’s critical! Not optional. But why? Why is full disclosure so important? And what happens when you aren’t crystal clear about all of your debts and assets during a bankruptcy filing?
What does disclosure mean during bankruptcy?
Let’s start at the beginning. Disclosure is important because that is a requirement of the federal bankruptcy code. In return for your full disclosure of ALL of your assets, you ask the bankruptcy court for relief. This means that you may be released from liability for certain, specified types of debts, or you may be permitted to restructure your debts to allow more time for paying them off. Sometimes, it’s a combination of both kinds of relief. In other words, you are no longer legally required to pay the debts as you previously agreed to do. That relief came at a price, though. And part of that price is complete transparency!
What happens when you don’t disclose everything?
Failure to disclose every single one of your assets can have lots of consequences, and none of them are good! Lack of candor can result in both the judge and the trustee losing confidence in your filings. It can also mean accusations down the road that you concealed property of value, or weren’t honest with the court. And that can result in you losing your discharge or restructuring, or worse – charges of perjury, bankruptcy fraud or criminal fraud!
What things should you disclose during a bankruptcy filing?
The answer is everything! When in doubt, speak to your bankruptcy attorney and then disclose everything on your bankruptcy schedules. That’s what does transparency means – disclose everything. Not most things. Or the big things. Or the things you think are worth something. Nope, it means everything. Your house, your car, your furniture, your clothes and shoes, the art hanging on your walls, cash under your mattress, your home decor, your phone, your tablet, your tv, your appliances. The money you have, and the money you owe. All of it!
Don’t make assumptions about what you should and shouldn’t disclose!
Many people misunderstand full disclosure when applying for bankruptcy relief. They choose not to disclose certain assets because they think “these items don’t count” or because “those are unimportant.” As a result, there are many things they don’t disclose, which puts them at high risk. Some of the explanations (which are all wrong) we’ve heard from clients include:
- Their clothing isn’t worth much, so they didn’t list it;
- Their bank account was overdrawn, so they didn’t include it;
- The bank has a lien on their home, so they don’t need to disclose it
If you have questions about what to disclose, talk to your debt relief attorney
Bankruptcy is always a confusing process, and for many people, a sad one. We understand that. There is a lot on the line, and you feel vulnerable and overwhelmed. You need someone who can listen without judgement, provide quality advice, and help you with whatever path you decide is right for your future. You need the experienced bankruptcy attorneys at The Kronzek Firm. Call us at 866 766 5245, or come in and talk to one of our skilled bankruptcy attorneys today. The consultation is free, and we can help you plan for a better future.