Why Full Disclosure Matters In Bankruptcy

Anyone looking to seek debt relief in bankruptcy will soon learn that the process is much more involved than most people assume. From the seemingly endless questions down to the finite detail of your income, debts, assets and property, it can seem overwhelming. While most people are guided by their Fort Worth bankruptcy lawyer in this process, some may commit (knowingly or unknowingly) an oversight in very important areas; threatening the outcome of their case.

An Open Book

When you file for bankruptcy you will be required to complete the petition and schedule of financial affairs, both are forms that outline your financial situation in depth. You will  need to provide detailed information about your debts, income, assets and funds. This information is provided in order to demonstrate to the court your inability to meet your debt obligations. This information also gives the court an idea of what, if any, nonexempt assets could be used to satisfy your debts to creditors.

It can overwhelming to see all of your details on these documents, and some people may feel tempted to leave out, hide, or even lie about this information in efforts to protect their things. This is considered a crime by the court and you could be charged with bankruptcy fraud, to which the punishment could be up to $250,000 in fees and/or five years in federal prison.

Detailed Changes

Although some commit fraud intentionally, there are cases  in which people simply forgot to list a piece of information or forget to inform the court of any changes. For example, if a person in a Chapter 13 repayment case was to acquire an inheritance or receive an increase in their income; the court must be notified. This is because any additional funds or income could change the repayment amount of the plan. Other factors that could change that could impact a person’s active bankruptcy case are changes in marital status, tax refund receipts, cashing in on certain fund accounts, monetary gifts from friends or family members, and location of residence.

It is extremely important to always be open and honest about your details with the court and your Fort Worth bankruptcy lawyer. If there are any changes to any aspect of your case or nature of debts and/or income, notify your  lawyer right away.