Whether it is a valuable collection of items in the attic or a trust fund, bankruptcy law requires that everything be included. Here is where having an attorney provides valuable assistance. There may well be options for dealing with the assets, but there's no question that everything must be included on the bankruptcy schedules and statements.
Bankruptcy law requires that all assets, income and debt be reported. Schedules A-J, filed with every bankruptcy petition, include these matters. A statement of financial affairs also asks pointed questions about the filer's finances.
All of these are filed with the significance of an affidavit. The filer must sign the completed bankruptcy petition below a line stating:
"I declare under penalty of perjury that the information provided in this petition is true and correct"
REVIEW BY THE TRUSTEE
The next checkpoint in the normal bankruptcy is the creditor's meeting, sometimes called "the 341", because the basis for the meeting is in section 341 of the U.S. Bankruptcy Code. In this meeting a trustee meets with the filers of a bankruptcy petition, asking them to raise their right hand and swear or affirm that all of the answers are true and correct. The trustee asks a number of questions about the papers filed in the case, but also asks about overall finances, to make sure the petition matches reality. The trustee also asks questions along the lines of:
"To the best of your knowledge, is the information contained in the petition, schedules, statements and related documents true and correct?"
"Are all of your assets identified in the schedules?"
These questions, from the Handbook for Standing Trustees, place the bankruptcy filer on record stating that the information disclosed in the documents is true, correct and complete.
CONSEQUENCES FOR NON REPORTING OF ALL ASSETS
The creditor's meeting is recorded. So, now not only has the person filing bankruptcy filed a signed, sworn paper trail, there is testimony. One of the reasons it is so important to ensure that all of the information given is complete is that there are penalties and sanctions for those who leave things out:
"A person who knowingly and fraudulently conceals assets or makes a false oath or statement under penalty of perjury in connection with a case under this title shall be subject to fine, imprisonment, or both" This is U.S. Bankruptcy Code Section 342 (b)(2)(A).
"All information supplied by a debtor in connection with a case under this title is subject to examination by the Attorney General." This is U.S. Bankruptcy Code Section 342 (b)(2)(B).
DISCLOSE, DISCLOSE, DISCLOSE
Real estate agents tell us there are three important factors in valuing real estate: "location, location, location".
Similarly, bankruptcy law has three crucial requirements for the documents filed: "disclose, disclose, disclose".
If there is any question about any individual asset, always err on the side of disclosure. There may be options for addressing the asset. Give your bankruptcy attorney a chance. But, there's no question that everything must be included on the bankruptcy schedules and statements.
Additional resources provided by the author
Bankruptcy presents uniquely complex procedural and legal challenges. The papers may appear simple at first glance. I highly advise that no bankruptcy should be filed without retaining experienced bankruptcy counsel.
This guide is offered for informational purposes only. It is not offered as, and does not constitute, legal advice. Laws vary widely from state to state. Bankruptcy examptions rely on state law. You should rely only on the advice given to you during a personal consultation by a local attorney who is thoroughly familiar with bankruptcy law.