VALUING YOUR ASSETS IN BANKRUPTCY

When filing for bankruptcy your attorney will ask you to value and disclose all your assets on the bankruptcy petition. The importance of an accurate, complete and honest disclosure of assets cannot be emphasized enough. Disclosures are required as to the nature, value, and disposal of assets. Knowingly and fraudulently undervaluing assets or nondisclosure of assets can equate to the intent necessary for the denial of discharge under 11 U.S.C. Section 727.  The intent requisite to preclude a discharge must be an actual fraudulent intent as distinguished from constructive intent. Actual intent such as to hinder a creditor may be inferred from the debtor's actions, like intentional undervaluing of assets or omitting assets. 

The criteria demanded by Section 727(a)(4) requires that the debtor be denied a discharge if he "knowingly and fraudulently, in or in connection with the case made a false oath or account." The false oath must relate to a material matter and may consist of (1) a false statement or omission in the debtor's schedules, or (2) a false statement by debtor at an examination during the course of the proceedings. 

The primary purpose of Section 727 of the Code, is to insure that dependable information is supplied for those interested in administration of the bankruptcy estate from which they can rely without a need for the trustee or other interested parties to dig out the true facts in examinations or investigations. The trustee and creditors are entitled to an honest and accurate value of assets and what property has passed through the debtor's hands during the period prior to the bankruptcy. 

Section 727. Discharge. 

(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; or

(4) the debtor knowingly and fraudulently, in or in connection with the case —

(A) made a false oath or account; 

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Section 727 of the Code must be construed liberally in favor of the debtor and strictly against the objector.  However, the debtor’s intentional actions to hinder the discovery of assets or past transactions maybe the basis for a Section 727 denial of discharge. Contact the attorneys at LifeBackLaw and see us at www.LifeBackLaw.com and let us help you get your life back.