Damned if You Do, Broke if You Donâ€™t
Thatâ€™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 donâ€™t.
Hereâ€™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, itâ€™s not quite the same list, if you get my drift. This is a prosecutorâ€™s dream; Â 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 thereâ€™s a false statement in there anywhere, itâ€™ll be found.
I gave a longer speech about this to a gathering of a couple hundred bankruptcy lawyers.Â Here is the short manuscript spelling out the dangers of filing bankruptcy after misbehaving:
If youâ€™re in this situation, get advice from a bankruptcy lawyer (and me) before filing.