I realize potential clients are scared when they come to see me and are unsure of their circumstances and their future. But this does not excuse a client from fully disclosing their financial situation to me or to any bankruptcy attorney. I can’t help you – if you don’t help me. So, what are the dangers of not telling me everything?
Property and/or property rights may be lost to the bankruptcy trustee or to a secured creditor if not properly disclosed. Clients often forget they have dormant savings accounts or accounts with credit unions – but this property that needs to be disclosed. The same is true with tax refunds, bank accounts that you are on but don’t use (such as a parent’s bank account), accrued vacation pay, salary or pension rights, insurance interests – especially if there is cash value.
Another often overlooked item is debt that where the client has co-signed for someone else. Even if you don’t have the item (such as a car), you are still liable for the debt and how that debt is treated in your bankruptcy could afffect the other co-debtor.
Clients often have the misconception that he or she can pick and choose which creditors will be included in the bankruptcy. WRONG!!! Failure to list a creditor could mean that debt is not discharged and cannot be discharged in a future bankruptcy.
Another common issue is when a client fails to disclose all of their property to the attorney and it turns out the property is not exempt. Had the potential client disclosed all the property interest upfront, the attorney may have advised the person not to file for bankruptcy or to delay the filing of the bankruptcy in order to keep the property.
Or, if you fail to tell me about a security interest in property such as where you have put up household goods for security for a personal loan, I am unable to utilize the statute to avoid the lien so that you can keep your household goods.
The biggest danger, though, is not disclosing all of your assets and having your discharge denied. Recently, one of our judges denied an a husband and wife their bankruptcy discharge due to their failure to disclose a number of assets. Not only did their bankruptcy discharge get denied, they still owed several million dollars in debt that can never be discharged, their non-exempt property was taken by the bankruptcy trustee and sold for the benefit of their creditors, and he will probably lose his law license. (The debtor was an attorney.)
As a bankruptcy attorney, I want you to get the maximum benefit of a bankruptcy filing and to help you keep as much property as you can. But in order to do so, it it critical that you disclose all of your assets and liabilities to me – no matter how insignificant you may think it is.