Many people are naturally anxious about what kind of information and documents they will need to provide in their Minnesota or any bankruptcy case. Given the social stigma about filing for bankruptcy, people often feel ashamed when they decide to file bankruptcy (although they should not!) and are, understandably, worried about having to disclose sensitive information regarding their financial situation and the matters leading up to their case being filed.
Honesty and Transparency in Your Minnesota Bankruptcy
The Federal Bankruptcy code requires, above all, that the debtor (person filing for bankruptcy) to be completely honest and transparent in all aspects of their bankruptcy case. The debtor starts their bankruptcy case by filing a Petition with the court. In the Petition, the debtor discloses their income, monthly expenses, property, debts, and any legally relevant financial transactions that occurred before the date the petition is filed. The Petition is designed to provide a comprehensive look at the debtor’s overall financial situation and whether they engaged in any transactions or conduct that would prevent them from being able to discharge their debts.
Submitting Your Minnesota Bankruptcy Petition
The debtor signs and submits their Petition to the court under the penalty of perjury. Therefore, the discovery that the debtor deliberately falsified any information in the Petition not only could cost them their right to have their debts discharged, but also puts them at risk from being prosecuted for violating Federal law. The debtor must also verify the truth of the information in their Petition, under oath, to the bankruptcy trustee at the debtor’s meeting of creditors (a.k.a. the “341” meeting), and the potential consequences of being untruthful at this meeting are the same as being untruthful in the Petition.
Documentation of Income and Financial Circumstances
Along with the Petition, the debtor is required to provide various documentation of their income and financial circumstances. At minimum, the law provides that the debtor provide full bank statements including the date they filed, evidence of recent income (i.e. pay stubs) and copies of their most recently filed tax return. In addition, the bankruptcy trustee has the right to request any documentation or information that is relevant to the debtor’s case and the debtor must provide such documentation and/or information, or risk losing their ability to discharge their debts.
The good news is that the large majority of cases are fairly routine with the trustee only asking for basic information and documentation from the debtor. The bankruptcy trustee’s primary job is to ensure that the debtor has not filed their case in bad faith and that the creditors are treated fairly. A debtor files their case in bad faith when they do so with the dishonest intent to abuse the bankruptcy law to defraud their creditors.
Examples of Fraudulent Bad Faith
Examples of fraudulent bad faith would include lying about, or failing to disclose, property in their Petition, underreporting their income, or wrongfully transferring property before the bankruptcy case is filed that the trustee may have been able to take to pay creditors. These types of actions can have the consequence of causing the debtor to lose their discharge of some, or all their debts, or worse, subject them to criminal prosecution, in some cases, depending on the severity and nature of the improper behavior.
Establishing Exempt and Non-Exempt Property
The trustee may also seek info relating to the value or nature of the debtor’s property to determine whether any of it is nonexempt (not protected under law), and therefore, available to take to pay creditors. However, in the large majority of cases, there is little-to-no unprotected property that can be taken from the debtor.
The good news is that the trustee will not be interested in the personal reasons that made it necessary for the debtor to file for bankruptcy, so long as it’s not relevant to any kind of fraudulent bad faith actions, as described above. Bankruptcy is designed to help the honest debtor, who is trying to get a fresh start. Any of the personal circumstances and financial decisions on the part of the debtor that led to the need for them to file bankruptcy are not relevant. It is only relevant that the creditors are treated fairly and that the debtor did not take any improper actions to the harm of the creditors.
The Benefits of Honesty as a Debtor in Your MN Bankruptcy
So long as the debtor is completely honest and forthright, abides by the Bankruptcy Code, and cooperates with the bankruptcy trustee in their case, they will almost certainly be fine and get the benefit of receiving a discharge of their debts. Although honest and dishonest debtors alike may experience issues in their case, it is the honest debtors who will, almost always, ultimately be okay in the end. Not so, with dishonest debtors.
CALL NOW FOR A FREE STRATEGY SESSION FROM A MN BANKRUPTCY LAWYER AT KAIN & SCOTT
You should always discuss these matters with an experienced bankruptcy attorney before filing for bankruptcy. Contact us at for a free consultation at KainScott.com.
