Why You Should Be Truthful in Bankruptcy Proceedings

Why You Should Be Truthful in Bankruptcy Proceedings

Why You Should Be Truthful in Bankruptcy Proceedings

When it comes to any court process, you are always urged to be truthful about the details you come forward with. The same can be said for bankruptcy proceedings if you are going through a business bankruptcy. Many debtors, unfortunately, believe that they can file and that the court does not need to know everything about their finances. Attorneys will tell you that you should always be truthful because the truth will come out at some point.

When an individual decides to lie and abuses the process, serious consequences can result. There are many reasons why you should never lie to the bankruptcy court.

Why You Shouldn’t Lie to the Bankruptcy Court 

If I File for Bankruptcy, Will I Keep My Home?Still Responsible for Debt: If you lie to the bankruptcy court, you might still be responsible for your debts and might not qualify for discharge, which is a court order that relieves you from obligations to pay your debts. If your debts are not wiped out, your creditors will still be able to come after you for payment.

Sell or Turn Over Property: Many people file for bankruptcy so that they do not have to sell their property and can hold onto the things that matter most to them. However, if the bankruptcy court has determined that you lied during proceedings, you might be required to turn over or sell personal belongings so that you can pay for your debts. If you were honest from the beginning, you might have been eligible to use exemptions and protect these assets from being sold. 

Revoked Discharge: If you have received a discharge, it could be revoked. This means that you automatically owe creditors once again because you engaged in bankruptcy fraud.

Failed Future Bankruptcy: If you decide that you need to file for bankruptcy in the future a second time, you might not be able to enter into a discharge. This means that the bankruptcy court knows that you were dishonest once before and will make you responsible for your debts from the very start. 

Criminal Charges: Bankruptcy fraud can cause you to face criminal charges. This is most commonly seen when debtors try to conceal their assets. This is considered to be a federal crime and you could face many penalties.

If you do not tell the truth during bankruptcy proceedings, this is considered to be illegal and could cost you everything. Fraud could come to the trustee’s attention quite easily, which can push you in a difficult position. The trustee can actually file a lawsuit against you if they believe that you have lied and they are able to prove it. They will use the hearing to the following things:

  • Recover property
  • Obtain hidden or undisclosed property that you were not honest about
  • Revoke the discharge from your bankruptcy
  • Recover property that was wrongfully seized by a creditor
  • Determine if liens were placed fraudulently or not

Speaking with a Business Bankruptcy Attorney 

At MJ Watson & Associates, our skilled bankruptcy attorneys in Texas can assist you through every step of the process. If you are suspected to be engaging in fraud, you could be facing criminal penalties that can impact every aspect of your proceedings. Bankruptcy is sometimes a difficult process and you have many rights. Please contact our attorneys in Texas to find out how we can assist you at (214) 965-8240.

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