Being in debt feels like you’re living someone else’s nightmare. The sun’s dimmer, the phone, and the mailbox are ominously threatening, and you can feel isolated and lonely even when standing in a crowded room filled with people you know and love.

Here’s your reality check: Debt happens to everyone, and using bankruptcy as a way out of the nightmare is more common than you may think.

Still, filing for bankruptcy means you have rules to follow. Bankruptcy isn’t about confessing your financial sins, nor is it as simple as bellowing I – DECLARE – BANKRUPTCY like Michael Scott. The details matter; failing to disclose all necessary information can severely damage your bankruptcy case.

Your Job in Bankruptcy? Transparency

Bankruptcy isn’t just a buzzword for financial distress. It’s a legal process; like any process, it has rules. As the debtor, your job is one largely based on transparency.

When you file for bankruptcy, transparency isn’t just a good policy; it’s the law. The US Bankruptcy Code mandates a debtor to file a list of assets and liabilities, current income and expenditures, and a statement of financial affairs.

Your debts, all assets, including property, and their value should be disclosed. You’re also required to detail your income and expenses and certain transactions involving the transfer of money or property.

In short, you have to lay bare every bit of your financial life: the debts, the assets, the income, the expenses. Failure to do so can result in consequences you don’t want to face.

Playing with Fire: Consequences of Incomplete or False Disclosure

Violating the disclosure rules in bankruptcy isn’t like forgetting to take out the trash. It’s serious stuff, like carelessly running a red light and ending up in the emergency room with broken bones.

Not fully disclosing or providing false information may result in the dismissal of your case, fines, or in some extreme cases, imprisonment. Yes, you read that right. Bankruptcy fraud is a federal crime.

Moreover, hiding assets might result in losing those assets to the bankruptcy trustee. You could lose a dormant savings account, an anticipated tax refund, accrued vacation pay, or insurance interests if they are not properly disclosed and exempted.

Bankruptcy Rule of Thumb: You’re Not as Smart as You Think

There are no secrets when it comes to bankruptcy. Trustees and judges have seen every trick in the book. Information is readily available. Technology makes it nearly impossible to hide the truth from the federal court system.

To underscore the importance of full disclosure in bankruptcy and the penalties for failing to do so, remember Teresa and Joe Giudice from the Real Housewives of New Jersey. Their bankruptcy tale could easily be a spin-off series, “The Real Convicts of Bankruptcy Fraud.”

In 2009, the Giudices filed for bankruptcy. But rather than being a ticket to financial freedom, it turned into a cautionary tale about the dire consequences of incomplete disclosure. Among the assets they failed to reveal were multiple businesses, various sources of income – including rental income and Teresa’s salary from the reality show – and even the true value of their home furnishings.

By 2014, the couple found themselves pleading guilty to fraud charges. Teresa was sentenced to 15 months in federal prison, while Joe received a 41-month sentence. They were also ordered to pay a hefty amount in restitution – to the tune of $414,588. And, as an extra sting, a significant amount of their debt was not discharged.

The Giudice debacle is a stark reminder of why you can’t play fast and loose with the bankruptcy court system. It also underscores the need for an experienced bankruptcy attorney to guide you in meeting your disclosure requirements and navigating the system.

The Disclosure Survival Guide to a Successful Bankruptcy

You can avoid such pitfalls by hiring a bankruptcy attorney who knows what they’re doing. They are your navigator through this complex process, ensuring you stay compliant with all rules and procedures under the US Bankruptcy Code.

They’ll draft your court documents accurately and ensure you fully understand the process. They’ll help you stay organized so you don’t get in trouble. And a good bankruptcy lawyer will work to maximize your protections under the law.

Understanding your disclosure duties puts you in greater control of your bankruptcy case. Don’t let fear or ignorance get in the way of your fresh financial start.


Meet Jay

Since I became a lawyer in 1995, I’ve represented people with problems involving student loans, consumer debts, mortgage foreclosures, collection abuse, and credit reports. Instead of gatekeeping my knowledge, I make as much of it available at no cost as possible on this site and my other social channels. I wrote every word on this site.

I’ve helped thousands of federal and private student loan borrowers lower their payments, negotiate settlements, get out of default and qualify for loan forgiveness programs. My practice includes defending student loan lawsuits filed by companies such as Navient and National Collegiate Student Loan Trust. In addition, I’ve represented thousands of individuals and families in Chapter 7 and Chapter 13 bankruptcy cases. I currently focus my law practice solely on student loan issues.

I played a central role in developing the Student Loan Law Workshop, where I helped to train over 350 lawyers on how to help people with student loan problems. I’ve spoken at events held by the National Association of Consumer Bankruptcy Attorneys, National Association of Consumer Advocates, and bar associations around the country. National news outlets regularly look to me for my insights on student loans and consumer debt issues.

I’m licensed to practice law in New York and California and advise federal student loan borrowers nationwide.