Why You Should Be Honest in Bankruptcy Proceedings

When it comes to any court process, you are always urged to be truthful about the details you provide to the court.  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 the company’s finances.  Attorneys will tell you that you should always be truthful because the truth will come out at some point.

When the owners or directors of a company decide to lie and abuse the process, serious consequences can result. There are many reasons why you should never lie to the bankruptcy court.

Why You Should not Lie to the Bankruptcy Court 

Still Responsible for Debt: If you lie to the bankruptcy court, you might still be responsible for your debts.  If your debts are not wiped out or reorganized, your creditors will still be able to come after you for payment.

Sell or Turn Over Property: Many companies and entrepreneurs 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 or failed to disclose assets, you might be required to turn over or sell assets so that you can pay for your debts.  If you were honest from the beginning, you would have reaped the benefits of the honest but unfortunate debtor.

Revoked Discharge: If you have received a discharge, it could be revoked.  This means that you automatically owe creditors 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 be barred by court order.  This means that the bankruptcy court knows that you were dishonest once before and will delay your ability to file bankruptcy.

Criminal Charges: Bankruptcy fraud can cause you to face criminal charges.  This is most commonly seen when debtors try to conceal 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 into 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 may use the lawsuit to accomplish the following things:

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

Speaking with a Business Bankruptcy Attorney 

Jermaine Watson is a skilled business bankruptcy attorney who can assist you through every step of the process.  If you are suspected of engaging in bankruptcy fraud, you may face criminal penalties that can impact every aspect of your bankruptcy proceeding.  Bankruptcy is a difficult process to navigate without the assistance of a business bankruptcy attorney.  Please contact Jermaine Watson to find out how he can assist you at 817-877-2861.