Our Client Who Lied

May 7, 2015 | Bankruptcy, Chapter 7 Bankruptcy

It was once said that “cheaters never win, and winners never cheat.” In a perfect world, this would be entirely true.

But it is an unfortunate fact of life that some us are going to cheat, some of us will steal, and all of us will lie at one time or another. And believe it or not, some people lie on purpose, get away with it, and are better off for having done so.

Lying to the bankruptcy court is not one of those situations. If you lie, you will get caught. Every bankruptcy case is scrutinized so thoroughly that it’s virtually impossible to cheat the system with a lie. And when you get caught, your case might get dismissed, and you could face fines and even jail time. Here is the story of one of our clients who lied.

Opportunity Knocks

A husband and wife came into our office with a substantial amount of credit card debt. Their combined income was barely enough to pay the minimum balance on all of their cards. The husband now faced a coming garnishment from one of his creditors. Losing 25% of every check to the garnishment would mean they no longer could pay even the monthly minimums on their cards, so they came to our office.

We quickly filed their case and stopped the garnishment before it even started. We eliminated all of their credit card debt, along with a few medical debts, and money owed from a repossessed vehicle. Over $50,000 in total debt was wiped out by filing their Chapter 7 bankruptcy. And that was the end of the story, or so we thought.

Lie Like a Rug

We were soon contacted by one of their credit card companies. One month before filing, our clients had charged over $8,000 on a credit card. They had paid for a hotel, airplane tickets, and other expenses to take a pre-bankruptcy trip to the Bahamas. Apparently, they weren’t all that worried about paying it back since they knew they were filing bankruptcy in a month.

So where was the lie?

In your bankruptcy petition the court asks specifically if you have made recent, large charges on a credit card. Our clients failed to disclose any recent charges in their paperwork. Immediately before filing, we review every single item of a client’s case in a face-to-face meeting to be sure nothing has changed before officially filing it. This gave them a second opportunity to disclose the charges, but they said nothing.

Believe It or Not

It turns out our clients were fortunate individuals. Although they lied on their bankruptcy paperwork, we were able to keep their case from getting dismissed, and we prevented them from having to pay any fines to the court. We also negotiated a payment plan with the credit card company which allowed them to pay the recent charges back in installments, instead of a lump sum. They still ended up eliminating over $42,000 by filing for bankruptcy.

If you plan to file for bankruptcy, don’t lie about anything. Disclose all of your assets and all of your debts to the best of your ability. If you get caught in a lie, you might not be as lucky as these clients were. Your case could be dismissed, you could have to pay fines to the court, and you could go to jail.

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