Everyone considering bankruptcy faces the question of what to tell their lawyer.
Sometimes it’s a problem you don’t want to face yourself, or a debt your spouse doesn’t know about.
The problem even the best bankruptcy lawyer can’t fix is the one you hide.
Maybe it’s a claim you hope to bring after the bankruptcy.
You’re tempted just to say nothing to your bankruptcy lawyer. Who will know?
When the truth is threatening
You’ve probably heard lots of the myths about bankruptcy floating around.
Then there are the stories from people who knew someone whose friend’s cousin filed bankruptcy some time back.
He didn’t tell everything and it worked out.
Maybe or maybe not.
People visiting a bankruptcy lawyer for the first time often are tempted to conceal debts, property, or transactions from their lawyer in the belief that if the lawyer had the facts, they would be barred from bankruptcy relief. That is seldom so.
Remember, your lawyer can’t protect you from problems created by secrets you keep. With all the facts, your lawyer can provide meaningful advice that maximizes the relief available in bankruptcy.
Hide your secret from your bankruptcy lawyer and you may have a problem far bigger than the one you’re trying to hide.
Full disclosure is the price of relief
Bankruptcy is grounded in full disclosure to the court and creditors. In exchange for transparency about your finances, you get a discharge of your dischargeable debts.
More importantly, your bankruptcy papers are signed under penalty of perjury. Get caught in a deliberate lie and you may lose the opportunity for a discharge of all of your current debts. One of the grounds for denial of discharge is “false oath”.
Perjury is a federal crime. You could find yourself the guest of Uncle Sam for up to five years.
The time-worn saying in bankruptcy is that it’s the X’s that will get you: the ex-spouse, the ex-partner, or the ex-friend.
Those folks may have a motive to call you out in court.
The trustee has a right to examine your tax returns, your bank statements, and your check register.
Secrets are hard to keep.
What to tell your lawyer
Get your money’s worth from your lawyer: tell them everything.
Usually the things people hope to keep from me are penny-ante things. When it is disclosed, I often find that what the client was worrying about isn’t really a worry at all.
When the secret does present a complication, we can look for a work around:
- undoing the transfer,
- filing Chapter 13,
- waiting to file til the secret is no longer a problem.
But I can’t fix things I don’t know about.
Start by making full disclosure to your bankruptcy lawyer. Your lawyer is on your side.