With many bankruptcy cases, I find that debtors are nervous about listing all of their possessions. They sometimes think, “Well, if I list it, do I have to give it up?” Not necessarily. A lawyer is, after all, there to protect the belongings that you want to keep. It is important to list all of your assets and debts because we have to get a snap shot of your current situation. If your lawyer or, more importantly, the bankruptcy court doesn’t fully understand what you own and what debt you’ve incurred, they won’t be able to help you in the best way possible. Moreover, hiding something from the court can be considered bankruptcy fraud—for which you can go to prison.
I heard a story about a woman in this very situation that I’d like to share to further illustrate my point. Julie Lynn Wagman was filing chapter 7 bankruptcy. When she was asked to list all of her assets, she left out an $8,000 rolex watch, a $4,400 tennis bracelet, and a $42,000 diamond wedding ring. When the trustee discovered that she had hidden these items, he conducted an examination in which she admitted to owning all of the items. The problem was that she had already lied under oath. She ended up pleading guilty to one felony count of making false statements under penalties of perjury in a bankruptcy proceeding. She could now face fines and jail time.
Honesty is an essential ingredient in having a successful bankruptcy. There are certainly cases where a debtor has forgotten something and the court understood it was an honest mistake. This woman, however, intentionally left off items out of fear. If she had just been truthful from the beginning, especially with her lawyer, all of this would likely have been avoided.
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