There are many myths and misconceptions about bankruptcy and, unfortunately, many of them can get you into serious trouble! A bankruptcy is a complete financial statement on everything as of the date it is filed.
It includes a full disclosure of everything you own, everything you owe, all of your income, and all of your living expenses. No exceptions. Not even one. Here are a couple of tips on how to avoid getting into trouble yourself.
List All of Your Assets
You must disclose everything you own, without exception. This might seem to be obvious, but people get in trouble oftentimes because they did not think a particular asset had any value. However, everything must be listed even if the item has no other value other than to you. The valuation must also be accurate and made in good faith.
A hot dog vendor in North Myrtle Beach, South Carolina, is facing time in a federal penitentiary because he valued his business in bankruptcy at $1,500 (the value of the hot dog cart). Unfortunately, while he was making payments on his Chapter 13 plan, he sold his business (without bankruptcy court approval) for $95,000!
On top of that, he only owed less than $10,000 to creditors. He could have just dismissed his bankruptcy and paid off his creditors or modified his plan. Because he did not, he is going to jail. Lesson to be learned: List every asset and be honest about its value.
List All of Your Debt
It is a popular misconception that you only have to list in your bankruptcy those debts that you plan to discharge. Wrong! You must list all of your debts because bankruptcy seeks to treat all creditors equally.
This can be difficult when the creditor is a friend or family member, or you do not want to be embarrassed by a particular creditor knowing you are in bankruptcy. Too bad; full disclosure is the "price of admission" for a fresh start in bankruptcy.
Bear in mind that when you sign that bankruptcy petition, you are doing so under oath. Not telling the truth could result in civil penalties, like the denial of your bankruptcy discharge, or criminal penalties that result in jail time.
Bottom Line
Be honest, be thorough, and stay out of trouble! Have a bankruptcy attorney handle your case and listen to what he or she tells you to do in disclosing financial information. Don't risk losing your fresh start, or your liberty, because you didn't!
If you live in South Jersey and are considering filing bankruptcy, please feel free to call my office at 856-432-4113 or contact me through this site for a free consultation in my Woodbury office to discuss your case.
If you are looking for more information about bankruptcy, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.
