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August 13, 2014

Why You Must Disclose Injury Claims When You File Bankruptcy

[this post is written by guest bloggers Lex Rogerson, who is a bankruptcy lawyer in the Lexington/Columbia area of South Carolina and Russell DeMott, a Charleston, South Carolina bankruptcy attorney].

If you have any kind of claim that could produce money or property for you, it’s critical that you tell your bankruptcy attorney all about it.  Here’s why.

Everyone who files bankruptcy is required to file a set of schedules that list all their debts and all their property.  These schedules are filed under penalties of perjury.  Most people try to give accurate information because they want to be honest but also because failure to do so is a federal crime.  Rich and powerful people have gone to federal prison for hiding assets.

The Bankruptcy Code defines “property” very broadly.  It includes much more than obvious things like real estate, cars, jewelry, and bank accounts.  It also includes intangible assets like tax refunds, potential lawsuits, and claims for personal injury, workers compensation, social security, or child support.  So the simple reason you should disclose such claims is to be honest and to comply with the law.

There is also a more complicated but equally powerful reason.  Courts have developed a doctrine called judicial estoppel that can kill your claim if you do not disclose it.

Judicial estoppel is based on every court’s desire to maintain its own integrity.  Judges believe people should not be able to assert one set of facts in one court and completely opposite facts in another.  Because people who file bankruptcy swear that their schedules accurately disclose all their assets, failure to list a claim in effect tells the bankruptcy court that you do not have a claim.  Then, when you try to prosecute the claim in another court, or before an administrative agency, you are saying that you do have a claim – the exact opposite. [Read more...]

Toyota Owners Beware: When filing for bankruptcy, don’t forget to notify the court/trustee of your participation in class action suits or the potential of receiving other settlements at a later time

As everyone knows, Toyota has been having issues with their vehicles lately. Millions of Toyota vehicles have been recalled due to faulty pedals and floor mats. If you are filing for bankruptcy and own a Toyota, it is important to talk to a lawyer about the Toyota recalls.

It is possible there are already class action lawsuits you are involved in which you may even be unaware of, or you may already have a claim against Toyota for defects or injuries suffered due to your vehicle.

When you are filing for bankruptcy, you must disclose all of your assets. If you have a claim against Toyota, or are a part of a class action lawsuit, it is considered an asset you own and must be disclosed in your bankruptcy case. If you’re in the situation where you didn’t know about the claim at the time you disclosed your assets, you need to update your paperwork with it when you do find out.

If you are going to someday recover money from a claim, who gets the share depends on the details of your specific case. However, your chances of keeping a share of the money are much better if you disclose it to the court, rather than the court discovering that you kept it from them.

For example, in 2007 a Utah couple lost a $50,000 personal injury settlement to the bankruptcy trustee when they failed to list the pending lawsuit as an asset when they filed Chapter 7 bankruptcy. The couple would most likely have been able to keep the settlement if they had disclosed the asset to the court, but they had knowingly concealed it and lost it instead.

It has been reasoned that if the filer can prove that they had absolutely no knowledge of the asset or there was no obvious reason to conceal it than they could keep it. The trial judges have great discretion in deciding if someone has purposefully hidden an asset or not. The lesson though is this; assets that should be yours can be easily taken away if you fail to disclose everything to the bankruptcy court.

If you own a Toyota and are filing bankruptcy, talk to a lawyer immediately to make sure you are aware of any class action lawsuits you are involved in and are disclosing all assets in your bankruptcy filing. After all you have been through already with a faulty product, the last thing you want is to lose access to the settlement payout you deserve.