What Must Be Disclosed in a Bankruptcy Case?

Filing for  bankruptcy offers a viable solution should you find yourself facing insurmountable debt and collection action from creditors. However, to take full advantage of the benefits bankruptcy offers, debtors have several duties. The primary duty is giving full disclosure of your financial situation.  The court requires debtors to supply quite a bit of information. Failure to reveal all your income and assets can lead to a denial of your Discharge, and even criminal prosecution. Below are some of the things you will be required to disclose. 

What Bankruptcy Laws Require You to Disclose

Assets 

When you are asked to list your assets, this refers to everything you own whether or not you believe it has any value. This means everything from real estate, vehicles, and cash to clothing, electronics, and furniture. It’s important to take an inventory of all household items, bank accounts, and retirement plans. Assets also include any claims you may have against others, such as personal injury or Worker's Compensation claims, claims against people who may owe you money, and income tax refunds owed to you. This is intended to give just a few examples, and is not exhaustive.

Many people are hesitant to disclose all their assets in bankruptcy. Most of the time debtors are allowed to exempt most, if not all, of their belongings, under either the Federal or local exemptions, which your bankruptcy attorney will be familiar with. Failure to list assets can have severe consequences. Bankruptcy Trustees utilize several online resources, such as Zillow, Google, and social media to determine if Debtors are being truthful. Your bankruptcy attorney will also conduct a thorough investigation, as he/she is required by law to do so. You should be completely truthful with him/her.\

Debts

Although bankruptcy is intended to discharge all unsecured debts, some people try to include only certain debts in their filing. Unfortunately, debtors don’t have a choice which debts they list. Anyone you owe money to must be disclosed, including credit card companies, mortgage and auto lenders, healthcare facilities, and friends and family. This is the case regardless of how big or small the debt might be. Also, you may not “pay off” preferred creditors just prior to filing. These payments must be disclosed and if they fall within certain time frames, will be set aside by the Court.

Income 

You must also tell the court about all your sources of income. This includes every job you hold, any work you get paid cash for, money you get from family members, spouses, or significant others on a regular basis, inheritances, pension, government assistance, and gambling winnings. Your earnings will have an impact on your bankruptcy eligibility, because there is a Bankruptcy “Means Test” which provides an income level for eligibility under Chapter 7.

Transactions 

There are certain transactions you will be obligated to disclose. Some of the things you will need to discuss with your bankruptcy lawyer involve assets that have been sold or given away in the two years before filing, payments you’ve made to a family member during the last year, payments you’ve made to any creditors within the last 90 days that exceed $600.00, and transfers of any asset you’ve made to anyone within the last six years. 

Whether it’s intentional or inadvertent, neglecting to disclose everything required under the Bankruptcy Code can cause your case to be dismissed. Additionally, you may face criminal charges for Bankruptcy Fraud. The best way to ensure you’re in compliance with the law is to work with an experienced bankruptcy lawyer who can guide you through the filing process. Thomas A. Corletta, Attorney at Law has spent more than 38 years representing debtors in the Rochester, NY, area. He has helped numerous clients achieve debt relief and get back on track with their finances. Contact his office at (585) 546-5072, or visit him online for more information.