If the headline drew you in, like the Geico gecko, you can complain you’ve been duped.
There’s no decision involved: in bankruptcy papers, you disclose everything. Period.
Disclosure is the price of the bankruptcy discharge.
Shortchange the system by leaving out inconvenient facts and you risk both the omitted asset and the discharge.
Understand the difference between discharge and dismissal.
A false oath on the bankruptcy papers or transfers intended to conceal assets from creditors are each grounds on which the discharge of all of your debts can be denied, while the trustee recovers and sells the assets.
It’s nasty and comes at a very high price.
Tell the whole truth
The reason for incomplete bankruptcy schedules is seldom an intention to conceal. It’s more often the filer’s failure to take disclosure seriously.
People ready to file bankruptcy don’t want to read the questionnaire that prompts them for various kinds of assets they might have. They don’t commit to thinking about how this question might apply to their situation.
Or they assume because an asset has little market value, it’s excluded from the schedules.
Not so. The schedules don’t ask for your significant assets or things you have with value; they ask that you list what you own.
You would not believe the number of clients whose completed questionnaires tell me they have no clothes.
Yet I’ve never met with a naked client. They just perform some sort of mental shortcut when we ask about what they own.
Transparent assets belong in bankruptcy papers
The hardest kind of things for laypeople to “see” as assets are those that are just legal rights, or even, possible legal rights:
- the worker’s compensation claim,
- the claim against the landlord,
- the participation in a class action.
All of those are assets that need to be listed.
Often a trustee will elect not to administer even non exempt assets, because the effort to pursue them is too great compared to the possible return.
But even if the trustee were to administer the claim for the benefit of creditors, the loss to the debtor is usually far less than the value of the discharge of debts you get in bankruptcy.
Image courtesy of Wikimedia and Frank Wouters.
Woman without clothes: Gisela Glardino and Flickr