Arizona Bankruptcy Disclosure
A bankruptcy filing requires a large amount of disclosure. The bankruptcy code requires that you tell the Arizona bankruptcy court about your current assets, debts, income and budget. It also requires that you tell the Court about assets you may have had in the past that you sold or gave away. Assets that you may have in the future like an inheritance or a personal injury settlement must also be disclosed.
When I explain the need for full disclosure and start to ask about items in the home as small as furniture and silverware, the common response is…will they actually come to my home and search it to find out if I disclosed everything?
The answer is… not in most cases, a visit is very rare.
Visits to the home may occur if the bankruptcy trustee believes that you have hidden something or that you have substantially undervalued what you own. The system assumes that you are telling the truth. But…don’t let this lull you into a sense of security and a decision to be sloppy about disclosure.
The penalties related to failure to disclose can be severe. They include the loss of the discharge, loss of assets and even jail in extreme cases.
I am often surprised by the desire of those in debt to attempt a purposeful and partial disclosure to the court in order to try and protect some asset worth a fraction of the overall debt being discharged in the bankruptcy. Doing so is dishonest and illegal, and is just not worth the risk in any event.