I have been a bankruptcy attorney since the late 1990s. During that time I have met with and advised thousands of people who are looking to improve their lives through bankruptcy. Usually, I am the first attorney they have ever met and considered hiring. That’s fine. I think a big part of my job is help people feel less nervous about the bankruptcy process.
Every once in a while, a new client will come to my office for the first meeting and will seem a bit jumpy. Questions that I ask seem to elicit sideways responses, answers that just don’t make sense. Sometimes I will hear responses that are actually questions, like, “Why do you need to know that?” My “favorite” answer is when I ask about the real estate or a car or stocks that this potential client owns, and the person responds, “Oh, no, I don’t want that included in the bankruptcy!”
All of these are clues to me that I’m not getting the full story and when I don’t get the full story, you can assume that I will not take the case. There is a lot at stake in a bankruptcy case and I want to make sure that I do the best job possible for my clients. If I sense that I’m not getting the truth from my clients, I will warn them what happens when a debtor in bankruptcy in not truthful. It’s not a pretty picture.
When I finished law school, my first job was as a law clerk for a federal bankruptcy judge in Fresno. Shortly before I arrived there, the judge had handled one particular case that is of interest to our discussion today. It seems that a woman in the Fresno area was suffering through some financial hardship and decided to file a bankruptcy case.
When she helped her attorney prepare the paperwork, she deliberately left out mentioning one piece of property, a cabin up in the woods that had been in her family for several generations. She figured that no one would know, no one would notice; her case would go through the system quietly, she would wipe out all her debts and on the other end, she’d still have the family cabin.
Her brilliant little plan had one little hiccup. It turns out the the nice, elderly gentleman who for many decades had owned a cabin right next to this woman’s family cabin was–the bankruptcy judge who would handle her case. You can imagine his surprise when he was reviewing the list of cases assigned to his court and he saw his cabin neighbor’s name.
The bankruptcy judge went down to the clerk’s office and pulled the file just to see what there was to see. Again, he suffered some surprise when he saw that the cabin up in the mountains right next to his was not listed as an asset. He was not pleased.
The long and the short of it was that the judge referred the matter to the US Trustee’s Office (a part of the US Department of Justice) and this woman was charged and convicted of bankruptcy crimes including concealing property of a bankruptcy estate. She ended up spending several years in prison all because she thought she could outwit the bankruptcy system.
It’s just not worth it! You need to be completely truthful with your bankruptcy attorney so he or she can help you. If you lie, you face not only a cratered bankruptcy case, but also prison time. Again, it’s just not worth it!
On the good side of things, an honest but unfortunate person with debts get to wipe out most of them. This means that a bankruptcy case that goes the way it’s supposed to could result in tens or even hundreds of thousands of dollars of debts just evaporating as a result of an order from a bankruptcy judge.
On the flip side, a dishonest debtors faces some pretty scary things. First, a dishonest debtor may find that certain of his or her debts does not get wipe out
By Oakland Bankruptcy Attorney James Pixton
*Photo courtesy of Almonroth (Wikimedia).