As more and more debt builds up, many people seek filing for Chapter 7 bankruptcy as an option for relief. Chapter 7 bankruptcy can assist people with large amounts of unsecured debts, like credit card debt, start fresh by wiping out their debts. Additionally, filing a Chapter 7 does not mean that you will have to give up all of your personal property. In many cases, individuals are allowed to keep the majority of their personal property through exemptions that are provided through the Bankruptcy Code.
Often times, many people will realize how great the bankruptcy system can be; generally, you file your case with the assistance of a St. Louis Bankruptcy Attorney, and a few months later, you’re free from the burden of your previous debt. With the knowledge that you can keep the majority of your property and discharge your unsecured debts, many people are tempted to “cheat” the bankruptcy system by spending large amounts of money on items that they never intend to pay back immediately before filing, or by lying about the value of some of their assets. These things, however, are forbidden by the Bankruptcy Code.
When filing for bankruptcy, you are required to do so “in good faith”. This means that you not only are being honest about the amount and value of assets you many own, but also are being honest about the burden of your financial situation. While it is very tempting to lie about the value of your assets in an attempt to keep meaningful personal items, it is very unwise to do so. If the Trustee, the person controlling your bankruptcy estate, finds out that you lied about the value of your property, or own something you did not disclose, you will face serious consequences. It is always better to be honest about your assets; many times, through exemptions or even an agreement with the Trustee, you will be able to keep things of personal and/or monetary value.
Filing in good faith additionally applies to the burden of your financial situation. If the bankruptcy court sees that you have been excessively using your credit cards, or have been buying luxury items like designer clothing and cruise vacations, in the time immediately before filing, they will not allow you to discharge these debts. The creditor will file an objection to your case, and if the court finds their argument to be legitimate, you may have to continue to pay back that particular debt. There are some allowances for situations where you have spent large amounts immediately before filing; however, generally speaking, it is not permitted by the Bankruptcy Court.
While it is tempting to try to get away with keeping particular assets, or to buy luxury items since the debt will be discharged, it is always best to be honest about your situation.