Debtors should disclose all assets on the bankruptcy schedules, and failure to do so can result in the denial of discharge. If a debtor discovers or remembers an asset was not properly disclosed on the bankruptcy schedules, even if the asset is discovered years later, the debtor should amend the schedules to properly disclose the asset.
The benefit to the debtor of reopening of an old bankruptcy case and properly disclosing is far better than allowing the omitted asset to be discovered by court, which could result in the denial of discharge.
Denial of discharge is "a serious matter not to be taken lightly by a court."
The provisions of § 727 are strictly construed in the debtors' favor, while remaining cognizant that § 727 exists to prevent a debtor's abuse of the Bankruptcy Code.
Section 727(a)(2) of the Bankruptcy Code states, in relevant part, that:
(a) The court shall grant the debtor a discharge, unless —
. . .
(2) the debtor, with intent to hinder, delay, or defraud a creditor or an officer of the estate charged with custody of property under this title, has transferred, removed, destroyed, mutilated, or concealed, or has permitted to be transferred, removed, destroyed, mutilated, or concealed —
(A) property of the debtor, within one year before the date of the filing of the petition[.]
By concealing ownership of an asset and failing to disclose it on the bankruptcy schedules the debtor can run afoul of § 727(a)(2).
For purposes of § 727(a)(2), concealment is a continuing event.
To deny discharge under § 727(a)(4)(A), the plaintiffs must prove that "the Debtor made a statement under oath; (2) the statement was false; (3) the Debtor knew the statement was false; (4) the Debtor made the statement with fraudulent intent; and (5) the statement related materially to the Debtor's bankruptcy case.
The bankruptcy petition and schedules are signed under penalty of perjury and made under oath, and testimony given during the first meeting of creditors is given under oath. If assets are not properly disclosed on the petition it can result in violation of section 727(a)(2).
The court will not simply sign a document allowing for non-disclosure of assets because it has been years since the initial bankruptcy filing. The case needs to be re-opened and the asset needs to be properly disclosed.
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It is important for bankruptcy filers to be honest with the bankruptcy estate and provide the estate with all known assets of the debtor. Concealment of assets can result in the denial of the bankruptcy discharge. Contact the attorneys at LifeBackLaw and see us at www.LifeBackLaw.com and let us help you get your life back.