In the world according to George Costanza of “Seinfeld” fame, a lie isn’t a lie if you believe it to be true.
That’s not a good defense in the world of the United States Bankruptcy Courts. And none of those judges are George Costanza.
When clients meet with our attorneys and paralegals at Steidl and Steinberg to prepare a bankruptcy case, we always tell them that honesty is the only policy when it comes to providing information. If you borrowed $2,000.00 from Aunt Ethel six months ago and you are paying her back at a rate of $50.00 a month, we need to know that. As far as the court is concerned, Aunt Ethel is a creditor just as Wal-Mart or GE Capital would be. We can’t, and won’t, look the other way because Aunt Ethel is family.
A person filing bankruptcy is swearing under the penalty of perjury that the information you are providing us is the truth. If you own two cars and a boat and a train collection and have a savings account and stock certificates, we need to know how much everything is worth. It seems there is a temptation to withhold information for fear of losing your property. Most of the time, there is no reason for fear as we will make every effort to protect your assets when we file the case. The bottom line is, we need to know what you own. We need to know the truth.
Darren Chaker of Beverly Hills, CA apparently didn’t take that oath seriously when he filed his Chapter 13 bankruptcy. Chaker stood before Judge Jeffrey Bohm and claimed the rental property he owned was never leased prior to his bankruptcy filing. The court would learn that Chaker had entered into an agreement with a realtor and had at least two rental contracts. Chaker failed to tell his bankruptcy attorney, and then the judge, about the rental income or the leases.
For his efforts in trying to slip something past the court, Chaker was found guilty of bankruptcy fraud. He has been sentenced to 15 months in a federal prison and three years of supervised probation. All for telling a lie.
Filing bankruptcy is based on the honor system, as the client is expected to provide all of the information, completely and truthfully, that is required to file the case. Bankruptcy is meant to give a person a chance for a financial fresh start. With that opportunity, is it worth the risk to withhold information, or blatantly lie, to try to hide some money or protect a relative because you are too embarrassed to tell them you have filed bankruptcy?
Darren Chaker apparently felt it was. Maybe he should put George Costanza on his prison visitor’s list.