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When it comes to filing bankruptcy you want to be sure to be honest when filling out all of your paperwork. Do not try to hide things from or fool the government, because it will only hurt you in the end. And like your taxes - if you give them reason to suspect one item, they may fully investigate it all.
Make sure you keep a paper trail, i.e. receipts, for anything unusual. For example, if you have recently sold property, the trustee in your case may wish to verify that you actually sold the property and didn't just "hide" it under another family member's name. A copy of your closing papers or your tax return showing taxes paid on the sale can help prove to the trustee that it was an actual sale.
Some other common ways people try to omit information are:
Not listing all cars you own. The DMV can instantly access all the cars registered in your name.
Not revealing back child support owed to you. If the amount is ever paid and you did not tell the government about it on your bankruptcy petition, you could end up having most or all of it taken by the court. By listing and exempting back child support owed to you, you are taking steps to keep any money you do end up receiving safe and secure.
Not listing all sources of income, even that coming from a non-spouse. If you have a live in partner or parents who are paying bills for you, you need to report this on your bankruptcy paperwork. If you are unemployed or only make 500 dollars a month and state that you are paying 2000 dollars per month in basic expenses, it won't take a math expert to see the figures don't add up. It is ok to get help with your bills, but you must let the court know.
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Inflating your monthly living expenses. For example, if you list your cable bill as being 120 dollars per month because you have the most expensive cable plan there is and rent three pay per view movies a month, you cannot honestly expect the court to take that as a living expense. Same with phone charges. Listing long distance as an expense because you call your sister out of state for an hour three times a month is not a valid expense - it is not needed and is instead a luxury. Use your common sense when listing monthly expenses. Luxuries are different than normal expenses.
Experts within the industry estimate that 10% of all bankruptcy petitions contain some elements of fraud (yes, not being all the way truthful on your petition is officially called fraud). Fraud was one of the bigger reasons the new bankruptcy laws were put into place.
In addition to causing hassle for you should you be investigated, causing delays in your case if you are asked to prove all the expenses you list or possibly getting your case dismissed altogether, it causes a general scrutiny on bankruptcy and may affect the future ability of citizens like yourself from getting their own fresh start.
The bottom line is that when you are filing bankruptcy, honesty is always the best policy. It helps not only your own bankruptcy petition, but helps keep the doors open for others who may be in the same position you are in the future.
Related Articles:
+ What debts can be discharged in bankruptcy?
+ Information about bankruptcy filing online
+ Be sure you've exhausted the alternatives before you file
+ The statistics of bankruptcy and those who file for it
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