Bankruptcy is your chance to start over. In exchange for your debts being ‘discharged’ you give up your assets and make a monthly payment during your bankruptcy. This is the cost to you of eliminating your debts once and for all so you can begin to rebuild your credit and your finances. It is never a good idea to hide things from your bankruptcy trustee. At a minimum, undisclosed information could complicate or lengthen your bankruptcy, at worst you could be charged criminally.
What Can Go Wrong If You Fail To Disclose?
Your discharge may be delayed to deal with outstanding items. If for example you forget to tell your bankruptcy trustee that you have significant unfiled tax returns, you may find that CRA requests that your discharge be delayed until you file all your old returns.
Your bankruptcy costs could be more than you expected. The cost of bankruptcy is affected by the requirement to pay surplus income. If you think telling your bankruptcy trustee you have a lower income will get you a cheaper bankruptcy you will be in for a surprise. You are required to file a statement of income as part of your bankruptcy process. Reporting income higher than you originally indicated could trigger a surplus income payment that your trustee could not have told you about since he was unaware of your higher income. It is better to fully disclose your family income up front, so you and your trustee can fully understand the cost of your bankruptcy and explore alternatives such as a consumer proposal.
You could extend the length of your bankruptcy. If you fail to disclose certain assets, or provide information that eventually complicates your bankruptcy, it is possible that this will delay your discharge. The court could issue an Order of Conditional Discharge which means that they will impose certain conditions or penalties before you are bankrupt. This could include extending the length of your bankruptcy and require you to make additional payments.
Your creditors can refuse your discharge. If you fail to disclose assets or important facts and your creditors feel you are acting fraudulently, they can petition to have your discharge refused. Your trustee can do the same if he feels you are withholding information or assets.
You could face criminal charges. In the extreme, if your omission is considered fraudulent it is possible that you could be charged criminally. When you file for bankruptcy you are required to sign your bankruptcy documents. One of these documents, the Statement of Affairs, is a listing of all your assets, liabilities and a summary of your personal information. Penalties for a false statement can be imposed under the Bankruptcy and Insolvency Act and the Criminal Code.
What About Honest Mistakes
Bankruptcy is often a stressful process for most people. It is quite possible that you will inadvertently forget to disclose something on your documents or tell you trustee. We all make mistakes sometimes and honest mistakes are easily remedied. As soon as you learn of your error, contact your trustee immediately. They can help you take appropriate action to correct the matter to everyone’s benefit.