It’s Advantageous to be Honest When Filing Bankruptcy
As an experienced Denver bankruptcy lawyer, I’ve been lucky to hardly ever come across situations where the debtor was not being fully honest with either myself, any creditors, the bankruptcy trustee or even the Colorado Bankruptcy Court. But, even once in a blue moon, I encounter borderline or outright fraudulent activity.
A debtor is required to fully disclose all income and expenses as well as assets and liabilities on the bankruptcy schedules. A debtor is also required to be fully honest with the trustee and creditors at what is likely to be the only hearing at which he/she will be present: the 341 Meeting of Creditors.
A dishonest bankruptcy debtor can be denied a discharge. What this means this that none of the unsecured debts intended to be eliminated will go away, thus retroactively reviving all of the debts. In addition, the trustee may still attempt to compel turnover of any assets not exempt from the bankruptcy estate at the time of the filing, thus causing the non-exempt assets to be liquidated and paid to creditors.
For any debtors who have already been granted a discharge, the court may revoke the discharge as if the discharge was never entered. Even worse is the possibility of the debtor facing criminal charges for bankruptcy fraud.
The honest and ethical debtor will be relieved of the debt intended for discharge, and will obtain a fresh start in life (at least financially). You never want to hide or conceal assets or income and risk losing the true benefits a discharge can offer.