In re recent case in the Galveston Division of the U.S. Bankruptcy Court for the Southern District of Texas, the Court determined that the couple had made false statements, including not disclosing the sale of two vehicles, as well as payments to creditors and transfers to their church. U.S. Trustee v. Spivey, Adv. No. 12-8002.

The Court found that the discharge of the debtors should be denied under Section 727 of the Bankruptcy Code. The debtors tried to say that it was their counsel's fault, but the Court found that "knowingly swearing to false information cannot be blamed on counsel's conduct," citing 5th Circuit authority.

I cannot tell from reading the opinion if the debtors were really trying to hide something, or they were just sloppy. But you can't be sloppy on something like filing legal documents with a federal court, or you may bear the consequences. These debtors did bear the consequences, they lost the ability to discharge these debts.

And not only that, but it is even possible to be prosecuted under Title 18 of the U.S. Code for perjury and bankruptcy fraud for lying to a bankruptcy court. In short, it is just not worth it. If you are planning on intentionally lying to a bankruptcy court, it's better to just not even file and take your chances with your creditors.

J Thomas Black
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Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization
It doesn't surprise me that making false statements when filing for bankruptcy can cause you problems. If you're in a bad enough position to file for it, then you should be as honest during the process as possible. It's not worth it to be denied. Keara |
by Keara Littner February 6, 2015 at 07:04 PM
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