One of the most basic tenets of bankruptcy: don’t lie! It’s not a complicated concept but it is is not always followed. Bankruptcy affords filers a broad range of benefits. Chief among them is the ability to eliminate your debt. Since this is debt that cannot be afforded, bankruptcy can be a big help.
But to reap the bankruptcy benefits, there are obligations. Telling the truth is one of those requirements. When you file bankruptcy you must be truthful in disclosing all your personal and financial information. Your income, expenses and assets are all required in preparing your bankruptcy petition and paperwork.
Your income, including your income history, is required as part of the bankruptcy process. Eligibility for certain bankruptcy filings, including both Chapter 7 & 13 filings, depend on the amount of income you earn. To file for Chapter 7 bankruptcy, your income must be lower than your expenses. For a Chapter 13 bankruptcy your must earn more than you spend. Whatever bankruptcy option you need, you must disclose accurate financial facts.
Same bankruptcy basic goes for disclosing your personal assets. When you file bankruptcy you can protect, or exempt, your property. In most consumer cases all property is protected. But you can’t lie. You must reveal all your property in your bankruptcy paperwork. Leaving out a home or car is a bad idea!
In addition to your personal information, another bankruptcy basic is to not lie about your debt. You must list it all in your bankruptcy petition and paperwork. You cannot pick and choose what debts to include in your bankruptcy. You must disclose all debts when you file bankruptcy. Eligibility and affordability of your bankruptcy is dependent on your accurate disclosure of your debts.
Even the debt you have and ability to discharge it through bankruptcy is reliant on truth. If you lied to obtain debt, you may not be able to eliminate it through a bankruptcy. The US Supreme Court recently ruled on this subject broadening the definition of fraud beyond just lying. This Wall Street Journal article reflects that ruling.
No matter the situation, when it comes to bankruptcy basics: don’t lie!