How Important is it to Complete Bankruptcy Schedules and Statement of Financial Affairs Accurately?

It is very important to correctly reflect the assets of your bankruptcy estate and your intentions as well as meet all the other requirements to properly file a bankruptcy.  Documents that appear thorough, accurate and complete when filed, tend to receive far less scrutiny.  When in doubt, disclose, disclose and disclose.  If the bankruptcy trustee believes a debtor, or even worse, debtor’s counsel, has not fully and truthfully disclosed all of the requested information, that trustee will question the debtor endlessly, and will also request documents from the debtor to prove the information in the petition.  It’s important to hire competent and experienced bankruptcy counsel who has a good relationship of trust with the Chapter 7 and 13 trustees for this reason.  Proper preparation of a bankruptcy petition is one of the most important things a debtor and debtor’s counsel can do:

• It ensures a quick and smooth 341 examination;
• The more complete the documentation is, the less questions a trustee needs to ask;
• The less questions the trustee asks, the more at ease the debtor feels;
• The less questions the trustee asks, the less risk in the debtor answering something incorrectly;
• The attorney and client look knowledgeable and well prepared in the eyes of the trustee;
• The less time both the attorney and client will to spend in follow up or amendment.

Some things cannot be corrected without a dismissal and re-filing.  So it’s important to get it right the first time.  If you don’t properly list and exempt property pursuant to the applicable Florida exemptions, you can lose it.  Florida has opted out of the federal exemptions, so they don’t apply.  If you’ve recently moved to Florida, the exemptions of the state you left may apply or the federal exemptions may apply.  It’s important to retain competent and qualified bankruptcy counsel particularly when you have things you want to keep – and don’t want to run the risk of losing them.

There are several common things that trip up debtors:

• Every asset needs to be disclosed (regardless of value – or if the item is exempt);
• Everything has SOME value;
• Gifts count – it does not matter how you came to own the asset;
• Engagement and wedding rings count;
• If something is broken or has little value – note this and state why;
• Personal property can be appraised ahead of filing if you have something unique and cannot estimate its value;
• A Trust is an asset that must be disclosed – you may be able to keep it depending upon the Trust itself;
• A pending claim or lawsuit against another has value and must be disclosed;
• Any transfers of property within two years of filing must be disclosed – this includes gifts, loans to family members and other third parties.

Have explanations or unusual or complicated matters ready.  At times, it may be better for debtor’s counsel to get the information to the trustee ahead of the meeting so they will be more prepared and perhaps have limited questioning on the record.  We have a list of sample questions on our website.

For more information about preparing to file bankruptcy, please call or email Arkovich Law for a free consultation.