If the consumer was honest with his/her declaration of properties when he/she filed bankruptcy he/she should now be ready to start a new life.
What if the consumer was dishonest?
When the consumer filed bankruptcy he/she swore under oath (penalty perjury) that everything in his/her paper is true to the best of his/her knowledge. If he/she deliberately omitted important details in his/her Statement of Financial Affairs, the U.S. Attorney’s office would be in on his/her case to possibly prosecute him/her for fraud.
*Via the new bankruptcy law: fraud-related cases from the bankruptcy court funnels through the U.S. Attorney’s office for prosecution and one out of 250 bankruptcy cases for auditing.
What should be reported to the trustee?
To avoid accusation or post-bankruptcy complications, the consumer should report to the trustee any changes in his/her financial status, address, job, and even marital status.
1.) Change of Address and/or Jobs and Divorce. The consumer who filed Chapter 13 should send the trustee a change of address form, especially if involves him/her selling the house, as the trustee may want to use the proceeds to pay off the creditors (if full payment was not proposed in the plan).
The trustee needs to also transfer the consumer’s income deduction order if he/she changed jobs.
If the consumers filed a joint bankruptcy, which is only for married couples, and then while the case is pending, decided to divorce, the trustee would file a motion to dismiss the case. However, some couples request for the bankruptcy procedure to proceed, (especially the repayment bankruptcy, Chapter 13) so they can continue to make their payments. Some trustees would allow for the case to go on if there are not going to be any issue with the bill split. The consumer could also, to avoid complications, ask the divorce court to handle the case in two stages:
1.) Change the status from married to divorced but the final division of properties begins after the bankruptcy case ends or 2.) Just physically separate, that way the properties would remain joint, and there would be no issues with the repayment. Even if it seems like an internal matter (between the spouses) the consumers should still inform the trustee of the case about changes in their decision.
2.) Discovery of a New Property. If after the discharge, a new property comes up, the consumer should immediately inform the trustee to avoid being accused of withholding information from the case. The trustee needs to evaluate the new property and determine if it is worth enough to reopen the case, or if it can justify the expenses of seizing the property, selling it, and then distributing the proceeds to the creditors.
Can the trustee reopen the case just like that?
Not really, to reopen the case, the trustee needs to file a petition with the bankruptcy court asking it to authorize the sale of the new assets for the benefit of the creditors.
How will the court respond to the request?
• The bankruptcy court judge could refuse the request if he/she believes that too much time has passed between the trustee knowing about the property, and the trustee filing for the case to be reopened.
• The request would also be rejected if it turns out that the assets overall worth is really not enough to justify all the trouble that reopening the case would generate.
• If the trustee’s request is granted, on the other hand, the consumer is going to face a Discharge Revocation
Other resources about potential problems with your bankruptcy:
Discrimination after filing bankruptcy
Budgeting after bankruptcy
Rebuilding credit after bankruptcy