Bankruptcy can bring individuals who are struggling with debt and financial troubles relief and a fresh financial start; however, before you consider filing for bankruptcy, you should understand the importance of being completely honest when filing. If you are not completely honest when filing for bankruptcy, your case may be thrown out and you may be charged with fraud and prosecuted by the FBI, which can result in jail time, fines, or other penalties.
Honest mistakes or oversights
If your bankruptcy application consists of some honest mistakes or oversights, you may be given a chance to correct them. This is known in bankruptcy as Amendments to the Schedules or statements of financial affairs.
Incomplete and/or inaccurate information
Further, when filing for bankruptcy, ensure that you have complete and accurate information. When you file, you will sign your bankruptcy petition, ensuring that all of the information that you have put on the forms is complete and accurate. Your signature signifies that you can be charged with perjury if it is discovered that you were dishonest on your forms.
Leaving out disputed debts
When filing bankruptcy, if you are not sure how to fill out any part of your forms, you should contact your bankruptcy attorney for details, specifically when it comes to disputed debts. These may be the debts that you do not think you owe, but your creditor does think you owe. You must still list these debts, as if you do not list all of your debts, you cannot be discharged from all of them, as well as not listing all of your debts may lead to fraud charges.
Leaving out some creditors
You may also be tempted to leave out creditors that you like, such as friends or business owners that you know; however, leaving out any creditor is considered bankruptcy fraud.
Not including some of the expected wealth
Further, you need to ensure that you include any wealth that you expect to receive, including any expected inheritances or existing claims (i.e. personal injury) that may produce a financial benefit, so that the court has a complete understanding of where you stand financially.