Your Duties to Disclose During Bankruptcy

Submitted by Jen Jones on Tue, 11/30/2010 - 7:26pm

Your Duties to Disclose During Bankruptcy

In every great relationship, transparency is essential. And a perfect match is often a partner willing to share their past relationships, their financial status as well as what they’re thinking. Similarly, in every fruitful bankruptcy, honesty is key. In fact, it is mandatory. So, if you’re bankruptcy bound, it’s always best to understand early on that, at the outset of your filing, you must act in good faith, revealing all salient points with both your bankruptcy attorney—the person or persons who represent you in your case—as well as your bankruptcy trustee—the person who administrates your case.

This “duty to disclose” can come in several forms and cover some of the most important parts of your bankruptcy process. So, without further ado, here are three areas where debtors just like you are expected to be open and honest in the beginning of the bankruptcy “relationship:”

(1) Duty to Disclose Pre-Bankruptcy Asset Transfers
Pretend you have a house, a couple of cars, some valuable jewelry, a few good investments, a boat as well as a boatload of unsecured debt to go along with it. You decide to file for bankruptcy to liquidate these consumer debts, but before doing so you secretly transfer many of these large-ticket assets to your Uncle Al—at least until your bankruptcy is filed, assessed and your case closed with a successful dissolution of your debts. Unfortunately, this is only “pretend,” as this very activity would likely be considred fraud— and the asset recovered by the Trustee. Not only that, but the fraud could be the basis for a denial of your discharge altogether. For this reason, full disclosure of any transfer of interest in any property is mandatory. Tell your attorney.

(2) Duty to Disclose Payments Made Before Your Bankruptcy
In many bankruptcy circles you’ll hear the advice that you should avoid repaying loans to family and friends prior to your bankruptcy filing. Your “duty to disclose” pre-bankruptcy payments is an important reason why. Just like a transfer of assets as mentioned above, paying off loans from friends and family can be seen as defrauding a party—choosing one, lesser priority “creditor” over possibly another higher-priority creditor, and is seen unfavorably by the bankruptcy court.  As a result, if you made pre-bankruptcy payments outside of what’s considered “the essentials”(e.g., mortgage, rent, utilities, food), you will need to disclose those payments in your bankruptcy.

(3) Duty to Disclose Any Lawsuits
Bankruptcy’s “duty to disclose” isn’t just a priority if you’re surrendering assets or otherwise paying out money to certain people, but it also applies when you can expect to receive payments. Again the means test plays a role when you expect to see a windfall in your near future. As such, if you are currently embroiled in any lawsuits or are expecting to be a part of a lawsuit from which you might receive some type of financial settlement, like worker’s compensation or a personal injury claim, you have a duty to disclose those facts.

As a result of the intricacies of bankruptcy, if you are a bankruptcy bound individual it is essential to consult with a qualified attorney before filing. A qualified bankruptcy attorney is important during the bankruptcy process to help you navigate any uncertain waters and work in your best interests during the duration of your personal bankruptcy. The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to +1-919-646-2654, or during the off hours, you can make your appointment online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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