Let Our 30 Years Of Experience Work For You

Photo of attorneys Shelley Slafkes and Bruce Levitt
Photo of attorneys Shelley Slafkes and Bruce Levitt
  1. Home
  2.  | 
  3. Bankruptcy Basics
  4.  | The Importance of Honesty

The Importance of Honesty

On Behalf of | Jan 17, 2017 | Bankruptcy Basics, Chapter 7 Bankruptcy

The importance of honesty in the bankruptcy process cannot be overstated. As part of the bankruptcy process, a filer must disclose all property, income, and debts. These declarations are made under penalty of perjury that everything contained in the bankruptcy petition is true and correct to the best of one’s knowledge, information, and belief. Honesty in this process is not optional; it is required. Failing to disclose income or assets can have wide-ranging implications from inability to discharge debt through to criminal liability.

Bankruptcy Trustees take bankruptcy fraud seriously. If a Trustee suspects fraud, he or she has several options. First, the trustee might request a rule 2004 examination. A rule 2004 examination allows a Trustee to compel testimony or document production from just about any person or business who has information or documents relevant to proving such fraud.

Second, if a Bankruptcy Trustee has enough evidence to establish fraud, he might file an adversary proceeding in bankruptcy court. This process is similar to a lawsuit, but proceeds to trial much more quickly. An adversary proceeding can be used to set aside fraudulent transfers, to turn over undisclosed property or assets, or to revoke the discharge of a filer who has not fully disclosed income or assets. Throughout this process, the Trustee has the ability to file for a temporary injunction. A temporary injunction allows the Trustee to stop an asset from being transferred or depleted while an adversary processing is pending. Depending on the nature of the fraud involved, a Trustee can request a temporary injunction without notifying the person in possession of the property.

Last, a Trustee who suspects fraud can turn the case over to the Office of the United States Trustee, who might refer the case for investigation by the Federal Bureau of Investigation or prosecution by the United States Attorney. If the case proceeds to criminal investigation, bankruptcy fraud is punishable by up to five years in federal prison and a fine of up to $250,000.

In short, dishonesty in the bankruptcy process is not worth it. It is therefore very important to hire a knowledgeable bankruptcy attorney to guide you through the process.

If you have questions about what must be disclosed in a bankruptcy, let the attorneys of Levitt & Slafkes, P.C.. help. We represent debtors in Chapter 7, Chapter 13 and Chapter 11 filings. Contact our law firm online or by calling 973-323-2953 to schedule a free initial consultation.