It is the golden rule of bankruptcy; and as bankruptcy attorneys, it is our mantra. Whether you're doing a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, the law requires that you list not only all of your debts, but also all of your assets...wherever they may be found. Disclose, Disclose, Disclose.
You see...bankruptcy is for honest people who want to pay their bills, but are unable to; it is not for people who could pay off their debt by selling the Harley, but don't want to. So what constitutes an "asset" that needs to be disclosed? Basically, it is anything and everything; everything that your name is on, or that you have any type of control over, or anything in which you have any type of legal interest. As bankruptcy attorneys, we've heard all the excuses:
"I didn't list it because I'm not putting that in the bankruptcy"
"I don't owe any money on it, so I didn't think I had to list it"
"My name may be on title, but I don't use it; it's not my car"
First of all, let's put to rest one piece of utterly incorrect information that seems to be floating around out there: contrary to what seems to be popular opinion of the non-attorney "experts" out there, you do not get to pick and choose what assets and liabilities you list in your bankruptcy paperwork. The law requires that you list ALL assets, and ALL liabilities, wherever they may be found. As bankruptcy attorneys, our job is to protect you, and make sure that you have as smooth a bankruptcy as possible, and we cannot do that unless you tell us everything.
Secondly, as part of your bankruptcy, you are required to attend the 341 Meeting of Creditors (for more information about the 341 Meeting of Creditors, please see our earlier post entitled "The Section 341 Meeting Of Creditors (AKA Your "Court Date")...What Is It?"), where the Bankruptcy Trustee will be asking you questions about all the information contained in the petition that was filed with the court. At the beginning of the meeting, you are sworn in and required to take an oath to tell the truth. The last thing you want is for the Trustee to start asking questions about an asset that he/she found, or that you let slip in the meeting, and that you failed to disclose on the bankruptcy petition.
This then begs the question that we will unfortunately get from time-to-time: "Well, how would they find out?" The answer to this question is: it doesn't really matter how they could find out, the important thing to know is that they can and do; and you do not want to get caught failing to disclose an asset. Failing to disclose an asset can result in, at a minimum, denial of your discharge, and, in more extreme circumstances, prison time. So the best course of action is: Disclose, Disclose, Disclose. As we tell our clients: "You have to play the ball as it lies."
Let your bankruptcy attorney decide whether the asset is actually an issue. Many times, we come to find that it's actually not quite the problem that the potential client thought it would be, and it's just fear of the unknown that causes him or her to fail to disclose an asset. This is why you hire an attorney.
So, whether you own it outright or make payments to a lender; disclose it. If there is a car in your name, whether you use it or not; disclose it. If you have a paid-in-full camp site trailer in your name, even if you consider it to be your boyfriend's property, disclose it. Real estate or bank accounts in other countries?; disclose it. Do you use a car or some other property that is actually owned by someone else, but you use it full-time and keep it at your home?; disclose it. Is there something that you're unsure of whether you need to disclose it?; disclose it.
Disclose it, Disclose it, Disclose it: Follow this advice and you are on your way to a smooth Chapter 7 or Chapter 13 bankruptcy.