Debtors should not make transactions in contemplation of bankruptcy, such as making credit card purchases immediately before filing the petition. Improper payments or transfers can be recovered by the bankruptcy trustee. Debtors must remember that the petition and schedules are signed under the penalty of perjury, and the debtor is examined under oath in at least one meeting of creditors. A creditor might request a more detailed and intrusive Rule 2004 examination. Any dishonesty i the bankruptcy case, such as concealing assets or income, could result in dismissal of the case or severe punishment for contempt.
Bankruptcy is an important tool when used properly by a distressed consumer or business.
There are serious consequences, however, for debtors who use the system frivolusly or dishonestly. Your CPA can help you determine if bankruptcy should become the correct option for you.