Filing for bankruptcy in Massachusetts — an example of what not to do

A recent decision by a Massachusetts bankruptcy judge highlights a textbook example of what not to do when filing a consumer bankruptcy case.

The end result was a somewhat unusual and extreme order retroactively revoking a Chapter 7 debtor’s bankruptcy discharge.

Judge William C. Hillman found that the debtor submitted multiple false statements when she originally filed her bankruptcy forms. “The False Statements infect every asset-related schedule and statement in the bankruptcy petition so as to completely shed doubt on the Debtor’s honesty. Not only did the Debtor grossly under-represent the value of the Checking Account, her largest liquid asset at the time that she filed her bankruptcy petition, she failed to disclose that she had been receiving Alimony amounting to almost 20% of her annual income, she underrepresented the value of her monthly payments from the Trust by approximately 75% on Schedule I and again at the Creditors’ Meeting, and under-reported her annual income by almost 70% for the year of and two years preceding the filing of her bankruptcy petition on the Statement of Financial Affairs.”

Among other misrepresentations, the debtor had stated that her checking account was $387.58, when at the time it was $8,551.76. She also omitted alimony from her income statements and understated income form a trust fund.

In all, this decision underscores the importance of accuracy in completing your bankruptcy paperwork, and provides a rather extreme example of the sanctions that can result from intentional misrepresentation.

The case is Shamban v. Larson, no. 06-10381.


By Doug Beaton

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