Do I have to list everything in my bankruptcy? Is everything included in my case?
Everything must be disclosed. All debts (everything you owe to anyone including disputed claims) must be disclosed. All assets (everything you own, no matter the value) must be disclosed. Assets you hold for others must be disclosed. Open and closed financial accounts must be disclosed including regular checking accounts and pension plans. Safe deposit boxes and the contents must be disclosed; storage lockers and their contents must be disclosed. Charitable donations and gifts over a certain sum must be disclosed. Insurance policies, books, cemetery plots, motorcycles and art must all be disclosed.*
Disclosures Must Be Complete and Accurate
When you disclose your financial information to your bankruptcy lawyer be as complete and accurate as possible. All assets, debts, income and expenses must be included and all supporting documentation submitted. The value of your assets is what you could sell them for, or the current market value, not what you paid for them. It also makes no difference if the item was a gift; none at all. You can’t value something at zero just because you didn’t pay for it. Make a reasonable inquiry using local dealers, Craigslist and/or eBay to get comparable values. If using eBay it is best to search for sold values and not use the listings which are often high. Have a realtor give you a selling price for your home that is geared to get a quick offer, not a high bargaining position. Use NADA or Kelley’s Blue Book to value your automobile.
Income Disclosures
Let your lawyer know how much your income is and its sources along with your monthly expenses. Include all sources from wages and dividends to social security and pension distributions. Include any investments and losses. Your attorney can decide when and where your information fits into the petition, schedules and financial affairs forms for a chapter 7 or chapter 13. This information will also form the basis for your reorganization plan in a chapter 13.
Possible Audit and Failure to Disclose
You should have documentation for all income, expenses, assets, debts and transactions. Documentation might include tax returns, W-2s, 1099s, pay stubs, profit and loss statements, or letters of award. One in every 250 bankruptcy cases is audited. If you are chosen for an audit the documentation will be valuable to establish you did your best to be accurate and complete in your disclosures.
You will want to search your records and your memory and be as complete as possible. Failure to disclose all of your assets, debts, income, expenses and financial affairs can result in you being denied a discharge and you may be charged with a crime. You might spend years in prison and have to pay a substantial fine.
The bankruptcy crime of nondisclosure or concealment of assets may also take the form of transferring or concealing property before you file without making the proper disclosures. If you are completely honest and forthcoming with your bankruptcy attorney you’ll have no problems. Your attorney will know what needs to be provided to the court and will have the documentation to back up her decisions.
*This disclosure applies to all bankruptcy cases and is not to be confused with the written disclosure statement required in a chapter 11 reorganization.
Other Lawyers writing on the Bankruptcy Alphabet: