Damned if You Do, Broke if You Don’t
That’s the tough love I often must tell a client who wants to file for bankruptcy after some sketchy financial business.
Actually, it could be: Jailed if you do, just broke if you don’t.
Here’s the problem:
First, the client may have signed documents in a mortgage, credit application, or divorce litigation that swear to one list of assets and liabilities. Subsequently, when she wants to sign a bankruptcy petition, it’s not quite the same list, if you get my drift. This is a prosecutor’s dream; two statements under oath that flatly contradict.
Second, even when a client does not have that glaring problem, he still exposes all of his finances for examination by a bankruptcy trustee. It can feel like the equivalent of a full physical examination, x-rays and colonoscopy included. If there’s a false statement in there anywhere, it’ll be found.
I gave a longer speech about this to a gathering of a couple hundred bankruptcy lawyers. Here is the short manuscript spelling out the dangers of filing bankruptcy after misbehaving:
If you’re in this situation, get advice from a bankruptcy lawyer (and me) before filing.