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Judge Did Not Believe Debtor’s “Honest Mistakes”

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A pro se Debtor filed a Chapter 7 bankruptcy.

The Trustee continued to find “mistakes” in the Debtor’s petition.   The most significant were in the Statement of Financial Affairs (SOFA).   Each time, the Trustee would ask the Debtor to correct the errors and there were continual errors or incorrect figures.  As a result, the Trustee filed a Motion to Deny the Debtor’s Discharge.

The Debtor asserted that these were honest mistakes and he had no intent to defraud.  He could not blame his attorney since he did not have an attorney.

It is important to note that the Debtor was no stranger to calculations and numbers; he worked in the financial industry and has a master’s in business administration.

Decision by Court:

  • Judge denied the Debtor’s discharge. Judge further included in his decision:   This case requires the Court to balance the most basic goal of the bankruptcy statutes, which is to provide an honest debtor with a fresh start, with an obligation of the Debtor to strictly comply with the requirements.   Bankruptcy is a privilege and not a right.
  • This does not mean that a debtor who makes an honest mistake cannot amend the submission. However, when the documentation shows a pattern of errors and only corrects them when the errors are discovered by the Trustee, then that Debtor runs the risk of losing the privilege of bankruptcy.
  • When debtors fail to comply with the law and requirements of bankruptcy, the consequences are severe.

I continually remind my clients that honesty is the best policy.  Debtors should look to hire a Board Certified attorney to represent you and not to “go it alone”.   Certified Bankruptcy Attorneys require support documents to substantiate the numbers submitted to the Court.