If you follow popular culture, you might be aware of the news of husband and wife reality television celebrities being indicted for bankruptcy fraud. As I understand the story, the two have been accused of exaggerating their income to qualify for loans and then of hiding their income and assets when they filed their bankruptcy petition. They face up to 50 years of prison time.
Assuming for a moment that the allegations are true, I can almost hear the conversation they had with their attorney before they filed their petition. “So, how will they know if we lie on our petition?” I get that question all the time. To me it’s a huge red flag. The fact of the matter is that if you are trying to eliminate (discharge) debts to your creditors, they are going to try and find a way to keep you from doing so. They’ll look at your credit application and your account statements and compare it to the bankruptcy petition. If they see a discrepancy, such as taking out a loan for a car but not listing that car on your petition, they are going to want to know more. Here, the husband and wife told the lender that they made much more money than they did and fraudulently induced the lender into giving them money on credit. Unfortunately, the couple could have faced fraud charges without even filing bankruptcy. And then the couple lied about their income to the bankruptcy court. The United States trustee doesn’t take kindly to that.
How will they know if you lie on your petition? You’d be surprised. Your petition is a snapshot of your financial life. If that snapshot looks like a Picasso painting, your creditors, the trustee, the US trustee, and the court are going to have questions. The only way to make it through the bankruptcy process without facing criminal charges is to disclose everything. It’s important to remember that your lawyer is your ally. If you don’t tell her everything, she can’t help you.
One of the best ways to avoid any problems when you file bankruptcy is to hire an experienced bankruptcy attorney to guide you through the process. If you have questions about whether any financial transactions you’ve made will cause any issues, we hope you’ll come in for a free, no-obligation consultation. You can schedule a consultation by calling 303.331.3403 or by using our online scheduling system.